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Is Realty Income's (O) Latest Dividend Hike Sustainable?
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Delighting its shareholders, Realty Income Corporation (O - Free Report) announced its 116th common stock monthly dividend hike since the company’s NYSE listing in 1994. The company will pay 24.75 cents per share in the dividend compared with the 24.70 cents paid earlier.
The increased dividend will be paid out on Jul 15 to shareholders on record as of Jul 1, 2022. The latest dividend rate marks an annualized amount of $2.97 per share compared with the prior rate of $2.964. Based on the company’s share price of $62.79 on Jun 14, the latest hike results in a dividend yield of 4.7%.
Solid dividend payouts are the biggest enticements for REIT investors and Realty Income is committed to boosting its shareholder wealth. This retail REIT holds the trademark of the phrase “The Monthly Dividend Company.” In March, it raised its dividend to 24.70 cents per share from the 24.65 cents paid earlier. The increased dividend was paid out on Apr 15 to shareholders on record as of Apr 1, 2022.
Though the latest hike marks a marginal increase from the prior dividend, the July payout will be the company’s 624th consecutive monthly dividend payout in its 53-year operating history. O made 99 consecutive quarterly dividend hikes. This retail REIT has witnessed compound average annual dividend growth of 4.4% since its listing on the NYSE.
The latest hike reflects Realty Income’s ability to generate decent cash flow through its operating platform and high-quality portfolio.
Realty Income derives more than 90% of its annualized retail contractual rental revenues from tenants with a service, non-discretionary and a/or low-price-point component to their business. Such businesses are less susceptible to economic recessions and competition from Internet retailing. Moreover, the company targets industrial properties leased to industry leaders, mainly investment grade-rated companies, providing more reliable streams of income, which boost the stability of rental revenues and generate predictable cash flows.
Realty Income exited the first quarter of 2022 with $1.63 billion in liquidity. The company ended the quarter with modest leverage and strong coverage metrics, with net debt to annualized adjusted EBITDAre of 5.4X and fixed-charge coverage of 5.6X. In April 2022, O expanded its unsecured revolving credit facility to $4.25 billion, replacing the existing $3.0-billion facility. It matures in June 2026 and includes two six-month extensions that can be exercised at the company's discretion.
Further, Realty Income has a well-laddered debt-maturity schedule with a weighted average maturity of 7.7 years. Manageable near-term maturities and ample liquidity provide the company with the financial flexibility to tide over any mayhem and bank on growth scopes. Further, Realty Income has a credit rating of A- (Stable) and A3 (Stable) from Standard & Poor’s and Moody’s, respectively, enabling it to procure debt financing at attractive costs.
Some better-ranked stocks from the REIT sector include National Retail Properties, Inc. (NNN - Free Report) , STORE Capital Corporation and SITE Centers Corp. (SITC - Free Report) .
National Retail Properties currently holds a Zacks Rank of 2 (Buy). National Retail Properties’ projected long-term growth rate is 4.00%. The Zacks Consensus Estimate for NNN’s 2022 funds from operations (FFO) per share has been revised 1.9% upward in the past two months.
Currently, STORE Capital carries a Zacks Rank of 2. The Zacks Consensus Estimate for STOR’s ongoing-year FFO per share has moved marginally north to $2.14 over the past two months, suggesting an increase of 13.8% year over year.
SITE Centers currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for SITC’s 2022 FFO per share has been revised a cent upward to $1.14 in a month.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Is Realty Income's (O) Latest Dividend Hike Sustainable?
Delighting its shareholders, Realty Income Corporation (O - Free Report) announced its 116th common stock monthly dividend hike since the company’s NYSE listing in 1994. The company will pay 24.75 cents per share in the dividend compared with the 24.70 cents paid earlier.
The increased dividend will be paid out on Jul 15 to shareholders on record as of Jul 1, 2022. The latest dividend rate marks an annualized amount of $2.97 per share compared with the prior rate of $2.964. Based on the company’s share price of $62.79 on Jun 14, the latest hike results in a dividend yield of 4.7%.
Solid dividend payouts are the biggest enticements for REIT investors and Realty Income is committed to boosting its shareholder wealth. This retail REIT holds the trademark of the phrase “The Monthly Dividend Company.” In March, it raised its dividend to 24.70 cents per share from the 24.65 cents paid earlier. The increased dividend was paid out on Apr 15 to shareholders on record as of Apr 1, 2022.
Though the latest hike marks a marginal increase from the prior dividend, the July payout will be the company’s 624th consecutive monthly dividend payout in its 53-year operating history. O made 99 consecutive quarterly dividend hikes. This retail REIT has witnessed compound average annual dividend growth of 4.4% since its listing on the NYSE.
The latest hike reflects Realty Income’s ability to generate decent cash flow through its operating platform and high-quality portfolio.
Realty Income derives more than 90% of its annualized retail contractual rental revenues from tenants with a service, non-discretionary and a/or low-price-point component to their business. Such businesses are less susceptible to economic recessions and competition from Internet retailing. Moreover, the company targets industrial properties leased to industry leaders, mainly investment grade-rated companies, providing more reliable streams of income, which boost the stability of rental revenues and generate predictable cash flows.
Realty Income exited the first quarter of 2022 with $1.63 billion in liquidity. The company ended the quarter with modest leverage and strong coverage metrics, with net debt to annualized adjusted EBITDAre of 5.4X and fixed-charge coverage of 5.6X. In April 2022, O expanded its unsecured revolving credit facility to $4.25 billion, replacing the existing $3.0-billion facility. It matures in June 2026 and includes two six-month extensions that can be exercised at the company's discretion.
Further, Realty Income has a well-laddered debt-maturity schedule with a weighted average maturity of 7.7 years. Manageable near-term maturities and ample liquidity provide the company with the financial flexibility to tide over any mayhem and bank on growth scopes. Further, Realty Income has a credit rating of A- (Stable) and A3 (Stable) from Standard & Poor’s and Moody’s, respectively, enabling it to procure debt financing at attractive costs.
Shares of this Zacks Rank #3 (Hold) company have declined 4% in the past three months, narrower than its industry’s fall of 15.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector include National Retail Properties, Inc. (NNN - Free Report) , STORE Capital Corporation and SITE Centers Corp. (SITC - Free Report) .
National Retail Properties currently holds a Zacks Rank of 2 (Buy). National Retail Properties’ projected long-term growth rate is 4.00%. The Zacks Consensus Estimate for NNN’s 2022 funds from operations (FFO) per share has been revised 1.9% upward in the past two months.
Currently, STORE Capital carries a Zacks Rank of 2. The Zacks Consensus Estimate for STOR’s ongoing-year FFO per share has moved marginally north to $2.14 over the past two months, suggesting an increase of 13.8% year over year.
SITE Centers currently carries a Zacks Rank of 2. The Zacks Consensus Estimate for SITC’s 2022 FFO per share has been revised a cent upward to $1.14 in a month.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.