Realty Income Announces 128th Dividend Hike: Is it Sustainable?

Dividend Increase Announcement - Realty Income Corporation (O) increased its common stock monthly cash dividend to 26.40 cents per share from 26.35 cents, marking its 128th dividend hike since its NYSE listing in 1994 [1] - The new dividend will be paid on Jan 15, 2025, to shareholders of record as of Jan 2, 2025, resulting in an annualized dividend of $3.168 per share and a dividend yield of 5.68% based on the Dec 10 share price of $55.78 [2] - This marks the company's 654th consecutive monthly dividend payout in its 55-year history [3] Dividend Growth and Consistency - Realty Income has made 109 consecutive quarterly dividend hikes and achieved a compound average annual dividend growth rate of 4.2% since its NYSE listing [4] - The company has increased its dividend 23 times in the last five years, with a five-year annualized dividend growth rate of 3.04% [5] Business Model and Financial Strength - Realty Income's business model supports sustainable dividend payments through reliable cash flows from its high-quality portfolio, with a focus on service-oriented, non-discretionary, and low-price-point retail tenants [6] - The company invested $740.1 million in 169 properties during Q3 2024, achieving an initial weighted average cash yield of 7.4%, and raised its 2024 investment volume guidance to approximately $3.5 billion [7] - Realty Income maintains a healthy balance sheet with $5.2 billion in liquidity, a net debt to annualized pro forma adjusted EBITDAre of 5.4x, and a fixed charge coverage of 4.6x [8] - The company's financial flexibility and lower debt-to-equity ratio compared to the industry support the sustainability of its dividend payments [9] Industry Context - Mid-America Apartment Communities (MAA) increased its quarterly dividend by 3.1% to $1.515 per share, with an annualized dividend of $6.06 per share [11] - Alexandria Real Estate Equities, Inc (ARE) announced a 1.5% sequential hike in its Q4 2024 cash dividend to $1.32 per share [12] - Whitestone REIT (WSR) declared a 9% increase in its monthly cash dividend to 4.5 cents per share for Q1 2025 [13]