Why Realty Income Is In My Portfolio

Core Viewpoint - Realty Income is recognized for its consistent monthly dividend increases, appealing particularly to retirees seeking income that keeps pace with inflation [1][3][16] Financial Performance - Realty Income has maintained a strong dividend consistency grade of A+ with 31 consecutive years of dividend growth and payments [2] - The company reported total revenues per share increasing from $4.32 in 2016 to an estimated $6.09 in 2024, reflecting a steady growth trajectory [7] - The Adjusted Funds From Operations (AFFO) per share has shown stability, with a growth rate of 4.68% over the past decade [10] Dividend Sustainability - Realty Income currently trades at a 5.6% dividend yield and a 7.3% forward AFFO yield, indicating that the forward AFFO comfortably covers the annualized dividend rate of $3.228 per share [14] - The company is expected to continue its history of gradual dividend increases, supported by stable cash flows [16] Market Position and Strategy - As a triple net lease REIT, Realty Income has secured a significant portion of its revenue for the long term, allowing for high margins and predictable earnings [4] - The company has utilized debt strategically, maintaining an A- credit rating, which supports its business model while managing interest rate challenges [11][12] Growth Outlook - Realty Income may face challenges in growth due to higher interest rates affecting its weighted average cost of capital, but it has demonstrated resilience in navigating these conditions [11][16] - Future growth may also be impacted by the ability to acquire properties at favorable capitalization rates, which has historically contributed to its growth [13]