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Realty Income: Monthly Pay Dividend Aristocrat With A Fat Yield

May 02, 2020 10:45 AM ETRealty Income Corporation (O)RFI, RQI, VNQ, VNQI507 Comments


  • Realty Income has seen its share price drop almost 40% on the back of the COVID-19 crash. A worst-case scenario already is priced in and the upside isn't.
  • The company made some well-timed moves, issuing both debt and equity at recent market peaks to improve its financial position.
  • At the same time, the company's low WACC combined with its long-term history of rewarding shareholders implies significant upside for those who invest now.
  • Today, it's selling at a highly opportunistic price. Buy O for its high yield and long-term gains.
  • Looking for a portfolio of ideas like this one? Members of High Dividend Opportunities get exclusive access to our model portfolio. Get started today »

Co-produced with The Value Portfolio

Realty Income Corporation (NYSE:O) has built a quality reputation as the "Monthly Dividend Company," and has recently reached dividend levels over 5%. The company is one of the largest publicly-traded REITs, with a market capitalization of more than $15 billion. O is one of the newest "Dividend Aristocrats," being introduced into the S&P Dividend Aristocrats Index in February of 2020 after raising their dividend every year (often multiple times a year) for 25 years.

O is a "triple-net" REIT, meaning that they primarily own standalone buildings that are leased to single tenants under long-term "triple-net" leases. These leases are characterized by being extremely hands off for the landlord, with the bulk of property level expenses being the responsibility of the tenant. Historically, this has been one of the most durable types of REITs, maintaining high occupancy levels and consistent revenue in even the worst recessions.

In the REITworld, O is universally recognized as one of the best operators and companies in a very defensive sub-sector of REITs. Call it a "blue chip," "SWAN," "top tier," "high-quality," "premium" or whatever your favored designation is. We call it a high-dividend opportunity that will produce reliable and growing income.

The company's near 40% drop in share price, as a result of COVID-19 concerns, means that now is the opportune time to add this quality dividend payer to your portfolio.

Corporate Office... - Realty Income Office Photo | Glassdoor

Realty Income headquarters - San Diego, CA

Realty Income Liquidity Improvements

Realty Income has managed to dramatically improve its liquidity in recent months, positioning the company well for the upcoming downturn.

Specifically, Realty Income has made two major decisions to improve its liquidity since the start of the current situation. In early April 2020, the company withdrew $1.2 billion under its revolving credit facility, where $1.2 billion now remains (not counting

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This article was written by

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Analyst’s Disclosure: I am/we are long O. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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