Exploring the Sustainability of Realty Income Corp's Upcoming Dividend
Realty Income Corp (O, Financial) recently announced a dividend of $0.26 per share, payable on 2024-05-15, with the ex-dividend date set for 2024-04-30. 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?
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. As a dividend aristocrat, Realty Income Corp has increased its dividend each year since 1999, a testament to its commitment to providing steady returns to shareholders.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Realty Income Corp's Dividend Yield and Growth
Realty Income Corp currently has a 12-month trailing dividend yield of 5.72% and a 12-month forward dividend yield of 5.74%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, the annual dividend growth rate was 3.00%, which remained steady over a five-year horizon. Over the past decade, the growth rate stands at 3.70%.
Based on Realty Income Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Realty Income Corp stock as of today is approximately 6.63%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. 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. However, Realty Income Corp's profitability rank, which stands at 8 out of 10, suggests good profitability prospects. The company has also reported positive net income for each year over the past decade.
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. With a strong revenue model indicated by a 7.30% average annual increase, Realty Income Corp outperforms approximately 64.66% of global competitors. Additionally, the 3-year EPS growth rate of 0.20% per year outperforms approximately 37.38% of global competitors. Lastly, the 5-year EBITDA growth rate of 0.90% outperforms approximately 46.76% of global competitors.
Next Steps
In conclusion, Realty Income Corp's dividend payments, consistent growth, and a strong payout ratio present a mixed picture. While the payout ratio raises concerns, the company's solid profitability and growth metrics provide reassurance. Investors should consider these factors in their overall assessment of Realty Income Corp's dividend sustainability. For those seeking high-dividend yield opportunities, GuruFocus Premium users can utilize the High Dividend Yield Screener.
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.
