Realty Income: Another BORING and Solid Quarter for the Monthly Dividend Company

It was another solid quarter for Realty Income (O)—one of my very favorite long-term dividend machines. Revenues jumped 22.6% on the back of new property investments and a 1.4% increase in same-store rents. During the quarter, Realty Income raised $528 million in a secondary share offering and ploughed $405 million of it into new properties and development projects while managing to modestly increase its occupancy rate from 98.2% to 98.3%. The new properties have a weighted average lease maturity of 10.6 years and a lease yield of 7.3%, meaning that these should be nice income generators for a long time to come.

Rather than think of Realty Income as a stock, I prefer to think of it as a perpetual bond with a rising, inflation-beating payout. Yes, it is “riskier” than your average corporate bond in that its stock price is more prone to fluctuation than that of a bond. As a case in point, O stock lost a third of its value during last year’s “taper tantrum.” Realty Income continued to pay and raise its dividend throughout the crisis years—and in my book, that qualifies O stock as a viable income substitute for bonds.

Source: Guru Focus

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