3 Reasons to Buy Realty Income Stock Like There’s No Tomorrow

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

3 Reasons to Buy Realty Income Stock Like There’s No Tomorrow

Realty Income (NYSE: O) is a boring company, which is something that ************* dividend investors should find very attractive. That’s because this “boring” company happens to offer a hefty 5.6% dividend yield. It is a great sleep-well-at-night investment selection.

To back that statement up, check out these three reasons to love this high-yield real estate investment trust (REIT).

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. 

This is the hidden content, please

• Sign In
• or
• Sign Up

Realty Income is

This is the hidden content, please

• Sign In
• or
• Sign Up

REIT, which means that its tenants are responsible for most property-level operating expenses. But it owns single-tenant assets, so this actually means there’s a fair amount of risk at each property. That risk is mitigated by the fact that Realty Income owns more than 15,400 properties. It is one of the largest REITs in the world.

Image source: Getty Images.

It is also one of the most diversified

This is the hidden content, please

• Sign In
• or
• Sign Up

in the world. Although the U.S. market is the largest in the portfolio, Realty Income invests across eight countries. It has been expanding that list as it reaches further and further into the ********* market.

Adding to that, Realty Income also spreads its portfolio across different property types, with the heaviest exposure to retail and a smaller position in industrial assets. It also has a fairly large “other” category, where it invests in property types like casinos and vineyards. Diversification helps to limit risk, but it also provides the REIT with additional levers to pull for growth.

The biggest testament to Realty Income’s financial strength is probably its three-decade-long streak of annual dividend increases. You simply can’t achieve that kind of consistency without a strong foundation and a solid business model.

However, there’s more to look at here. For example, the adjusted funds from operations (FFO) payout ratio is roughly 75%, which means there’s plenty of room for adversity before a dividend cut would be on the table.

The dividend, meanwhile, is sitting atop an investment-grade-rated balance sheet. This is where the company’s size comes back into play. Being financially strong and large generally affords Realty Income greater access to capital markets than its peers. So it can raise the money it needs to support its business and dividend fairly easily — a competitive advantage that shouldn’t be overlooked.

The long history of annual dividend increases has already been noted as a sign of a strong and successful business. But there are others that should be considered, too. For example, Realty Income’s occupancy is solidly above the occupancy of the average REIT in the S&P 500 (SNPINDEX: ^GSPC). Even during the Great Recession, occupancy didn’t fall below 96%. This is a very strong portfolio.

Story Continues

O Chart

But there’s another interesting statistic to consider: In the third quarter of 2024, Realty Income recaptured 105% of its expiring lease rents. Realty Income’s leases generally include regular rent increases, so this basically means that its properties are so desirable that tenants are willing to pay even more than they had been to stick around, or that new tenants are willing to pay more than older ones to get into one of the REIT’s properties. That’s a clear sign that management is doing a good job of selecting assets.

All that said, Realty Income isn’t going to excite you. For example, the dividend growth rate here is likely to be in the low-to-mid single digit percentages, just as it has in the past. But when you add that to the financial strength, diversification, strong operating history, and, of course, lofty yield, you can see why ************* dividend investors should have Realty Income on their wish list, if not in their portfolio.

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a

This is the hidden content, please

• Sign In
• or
• Sign Up

recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

This is the hidden content, please

• Sign In
• or
• Sign Up

: if you invested $1,000 when we doubled down in 2010, you’d have $23,446!*

Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,982!*

This is the hidden content, please

• Sign In
• or
• Sign Up

: if you invested $1,000 when we doubled down in 2004, you’d have $428,758!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

This is the hidden content, please

• Sign In
• or
• Sign Up

*Stock Advisor returns as of November 4, 2024

This is the hidden content, please

• Sign In
• or
• Sign Up

has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a

This is the hidden content, please

• Sign In
• or
• Sign Up

.

This is the hidden content, please

• Sign In
• or
• Sign Up

was originally published by The Motley Fool

This is the hidden content, please

• Sign In
• or
• Sign Up

#Reasons #Buy #Realty #Income #Stock #Tomorrow

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up