The monthly dividend company has typically raised its dividend quarterly.
Realty Income (O 0.46%) calls itself the Monthly Dividend Company, and passive income investors count on the growing dividend it has paid for the past 652 consecutive months — that’s more than 54 years.
It has raised the dividend quarterly for nine years, and it’s one of the most reliable dividends on the planet. Let’s see how much Realty Income is going to pay out in dividends next year.
The best of the REITs
As a real estate investment trust (REIT), Realty Income pays out most of its earnings as dividends. It invests in properties that it leases to its thousands of tenants, and it grows its business through acquisitions and buying more properties. The REIT has more than 15,000 properties today and is one of the biggest REITs in the world.
As a real estate company, Realty Income’s business is affected by real estate trends. With pressure in the industry, Realty Income stock was declining, but it’s moving back in the right direction, up 7% this year. At the current price, Realty Income’s dividend yields 5.1%, or nearly four times what the S&P 500 (^GSPC 0.61%) collectively yields.
There isn’t any reason to be worried about Realty Income’s business even in this environment, or its dividend. Its largest tenants are essential retailers in categories like grocery and convenience stores, which account for about 20% of its total rental income. But management touts its industry diversity, which hedges against challenges in any particular area. It has a 98.8% occupancy rate, which it has kept almost perfectly over time.
That strength is showing up in its results. Adjusted funds from operations (FFO), the main bottom-line metric for REITs, increased 6% year over year to $1.06 in the second quarter.
That’s what funds the dividend. It pays $0.26 per share monthly, or $3.16 annually at the current dividend. With 870.87 million shares outstanding, that means $2.75 billion in total dividends. But it will be raised a few more times over the next 12 months, so expect that total payout to be higher for 2025.
Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.