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The Ultimate Dividend Stock to Buy for a Lifetime of Passive Income
Realty IncomeRealty Income(US:O) The Motley Foolยท2025-03-29 22:14

Core Viewpoint - Realty Income is highlighted as an exceptional dividend stock due to its attractive yield, monthly payment frequency, and consistent growth, making it ideal for passive income seekers throughout their lifetime [1]. Group 1: Dividend Yield and Payment Frequency - Realty Income offers a dividend yield of approximately 5.7%, significantly higher than the S&P 500's yield of around 1.3% [2]. - The REIT pays dividends monthly, which is more frequent than the typical quarterly payments of most dividend stocks [2]. Group 2: Financial Stability and Risk Management - Realty Income has a low risk of needing to reduce its dividend payments, supported by a high-quality portfolio and a strong balance sheet [3]. - The REIT's dividend payout was less than 75% of its adjusted funds from operations (FFO) last year, allowing for substantial free cash flow for new investments, totaling nearly $930 million [5]. - Realty Income is one of only eight REITs in the S&P 500 with two bond ratings of A3/A- or better, indicating a conservative financial profile [5]. Group 3: Growth Record and Future Potential - Since its public listing in 1994, Realty Income has increased its adjusted FFO per share every year except for 2009, achieving a 5% compound annual growth rate over the last 30 years [7]. - The REIT has increased its dividend 130 times since going public, maintaining a streak of 30 consecutive years and 110 quarters of dividend increases, with a 4.3% compound annual growth rate over the past three decades [8]. - Realty Income has a total addressable market for net lease real estate in the U.S. estimated at $5.4 trillion, with an additional $8.5 trillion potential in Europe, indicating significant future growth opportunities [9]. Group 4: Investment Expansion and New Platforms - The company has recently ventured into new property verticals, including data center development and gaming properties, adding $700 billion in potential future investment opportunities [9]. - Realty Income has established a credit investment platform and launched a private capital fund management business to tap into the $18.8 trillion U.S. private real estate sector, enhancing its investment capabilities [11]. Group 5: Conclusion on Passive Income - Realty Income is positioned to produce durable and growing passive income through its high-yielding monthly dividends, strong financial profile, and robust growth prospects, making it an ideal choice for long-term investors [12].