Realty Income Corp's Dividend Analysis
Assessing the Sustainability and Growth of Realty Income Corp's Dividends
Realty Income Corp (NYSE:O) recently announced a dividend of $0.26 per share, payable on 2024-04-15, with the ex-dividend date set for 2024-03-28. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Realty Income Corp's dividend performance and assess its sustainability.
What Does Realty Income Corp Do?
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Realty Income owns roughly 13,400 properties, most of which are freestanding, single-tenant, triple-net-leased retail properties. Its properties are located in 49 states and Puerto Rico and are leased to 250 tenants from 47 industries. Recent acquisitions have added industrial, gaming, office, manufacturing, and distribution properties, which make up roughly 17% of revenue.
A Glimpse at Realty Income Corp's Dividend History
Realty Income Corp has maintained a consistent dividend payment record since 1994, with dividends currently distributed on a monthly basis. The company has increased its dividend each year since 1999, earning it the status of a dividend aristocrata title reserved for companies that have increased their dividends annually for at least the past 25 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Realty Income Corp's Dividend Yield and Growth
As of today, Realty Income Corp currently has a 12-month trailing dividend yield of 5.81% and a 12-month forward dividend yield of 5.84%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 3.00%, which remained consistent over a five-year horizon. Over the past decade, Realty Income Corp's annual dividends per share growth rate stands at 3.70%. Based on the company's dividend yield and five-year growth rate, the 5-year yield on cost for Realty Income Corp stock as of today is approximately 6.74%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Realty Income Corp's dividend payout ratio is 2.24, which may suggest that the company's dividend may not be sustainable.
Realty Income Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Realty Income Corp's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Realty Income Corp's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with an average annual increase of approximately 7.30%, outperforming about 68.13% of global competitors. The 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run, with an average annual increase of approximately 0.20%, outperforming about 41.2% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 0.90% outperforms about 45.79% of global competitors.
Next Steps
In conclusion, Realty Income Corp has demonstrated a strong dividend history and growth, but the sustainability of its dividend payments may come into question due to its high payout ratio. However, the company's solid profitability and growth metrics provide some reassurance. Investors should consider these factors in their overall assessment of Realty Income Corp's dividend prospects. For those seeking to explore further, GuruFocus Premium users can utilize the High Dividend Yield Screener to find high-dividend yield stocks.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
