Realty Income Announces 130th Dividend Hike: Is It Sustainable?

Realty Income Corporation O has announced an increase in its common stock monthly cash dividend to 26.85 cents per share from 26.80 cents paid out earlier. Though the latest hike marks a marginal increase from the prior dividend, it marks its 130th dividend hike since its listing on the NYSE in 1994. Prior to this, in February 2025, the company had announced a 1.5% hike in the common stock monthly cash dividend.The increased amount will be paid out on April 15 to its shareholders on record as of April 1, 2025. The latest dividend rate marks an annualized amount of $3.222 per share compared with the prior rate of $3.216. Based on the company’s share price of $56.37 on March 12, the latest hike results in a dividend yield of 5.72%.Solid dividend payouts are the biggest enticements for real estate investment trust (REIT) investors, and Realty Income is committed to boosting its shareholder wealth. It has made 110 consecutive quarterly dividend hikes. This retail REIT has witnessed compound average annual dividend growth of 4.3% since its listing on the NYSE. The REIT enjoys a trademark of the phrase “The Monthly Dividend Company” and has increased its dividend 23 times in the past five years. Check Realty Income’s dividend history here.O’s Business Model Supports Sustainable Dividend PaymentRealty Income maintains a highly resilient portfolio, making it an attractive option for fixed-income investors. Its strong growth and diversification have transformed it from a traditional net lease operator into a top-tier REIT with a broad, multi-sector and geographically diverse asset base. Realty Income’s solid underlying real estate quality and prudent underwriting at acquisition have helped the company maintain high occupancy levels consistently. Despite economic uncertainties, Realty Income maintained an impressive 98.7% occupancy rate as of Dec. 31, 2024. Management expects the 2025 occupancy to remain above 98%.The majority of its annualized retail contractual rental revenues are generated by clients who have a service, non-discretionary and/or low-price-point component to their business. Such businesses are less likely to be affected by economic downturns and competition from online sales. These provide more reliable streams of income, which boost the stability of rental revenues and generate predictable cash flows.Realty Income’s growth strategy appears promising, fueled by its increasing global footprint, especially in Europe, which paves the way for sustained expansion. Its diversification into emerging asset classes, such as gaming and data centers, highlights a progressive, future-oriented approach. For 2024, the company allocated $3.9 billion in investments, achieving an initial weighted average cash yield of 7.4%. O now expects a full-year 2025 investment volume of approximately $4 billion.With strong cash flows from 15,621 properties in all 50 U.S. states, the U.K. and six other countries in Europe as of Dec. 31, 2024, Realty Income boasts a solid balance sheet and A3/A- credit ratings from Moody’s and S&P. O ended 2024 with $3.7 billion in liquidity and a fixed charge coverage ratio of 4.7. Net debt to annualized pro-forma adjusted EBITDAre was 5.4X. Further, Realty Income has a well-laddered debt-maturity schedule with a weighted average maturity of 6.6 years. The company is also exploring a private capital initiative to build upon its established platform to unlock new investment opportunities.Despite market uncertainties emanating from policy shifts, economic volatility and anticipations of high inflation, this REIT, with ample financial flexibility, remains well-poised to respond to challenges and bank on growth opportunities. With a healthy financial position and a lower debt-to-equity ratio compared with the industry, we expect the latest dividend rate to be sustainable. So far in the year, shares of this Zacks Rank #3 (Hold) company have risen 5.5% against its retail REIT and equity trust industry’s decline of 4.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Image Source: Zacks Investment ResearchOther REITs Who Recently Announced Dividend IncreasesOn March 6, delighting its shareholders, American Tower Corporation AMT announced a 4.9% hike in its quarterly dividend on the company’s common stock to $1.70 per share from $1.62 paid out earlier. The raised dividend is scheduled to be paid out on April 28 to shareholders of record as of April 11, 2025. AMT recently hinted about its plan to resume dividend growth at mid-single-digit rates in 2025 after focusing on deleveraging in prior years. In 2024, amid the setbacks that impacted its growth rate, this tower REIT had paused its dividend hikes for the year.On March 3, Chatham Lodging Trust CLDT announced that its board of trustees raised its quarterly common dividend by 29% to nine cents per share. The increased dividend is payable on April 15 to shareholders of record as of March 31, 2025.Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Tower Corporation (AMT): Free Stock Analysis Report Realty Income Corporation (O): Free Stock Analysis Report Chatham Lodging Trust (REIT) (CLDT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks