Realty Income: A Dividend Story for the Patient Investor

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So, you’re thinking about income, are you? Not the kind you earn, naturally, but the kind that sort of… arrives. Divides itself up and lands in your account. A perfectly reasonable ambition, and one that leads a surprising number of people to the doorstep of Realty Income (O 0.79%). It’s a Real Estate Investment Trust, or REIT, which sounds terribly complicated, but really isn’t. Think of it as a company that owns a lot of buildings, and then rents them out. Simple enough, you’d think. But there’s a bit more to it than that, and it’s rather fascinating. Especially when you consider they’re currently yielding a rather attractive 5.2% – which, just to put things in perspective, is about four times what you’d get from an S&P 500 index fund. Four times! That’s enough to make one sit up and take notice.

What Does Realty Income Actually Do?

Realty Income specializes in what’s called ‘net lease’ properties. This is where things get a little bit clever. Essentially, they own the buildings, but the tenants – think drugstores, grocery stores, convenience stores – pay most of the operating costs. Property taxes, maintenance, insurance – all that falls to the tenant. It’s a bit like being a landlord who doesn’t actually do any of the landlord-y things. It reduces risk, of course, but it also means Realty Income doesn’t have to spend its time wrestling with leaky roofs and recalcitrant tenants. They have over 15,500 properties, which, when you think about it, is a lot of buildings. A truly staggering number.

About 80% of their income comes from retail, which sounds… concentrated. And it is. But it’s not quite as alarming as it seems. These aren’t fancy boutiques or high-end department stores; they’re the everyday places people go to buy milk, prescriptions, and lottery tickets. Relatively predictable businesses, all things considered. Plus, they’ve been diversifying into industrial properties, casinos (yes, casinos!), and even data centers. Which, if you think about it, is quite a jump. From selling cough syrup to storing the internet. The company also operates across the US, Europe, and, just recently, Mexico. They’re spreading their wings, you might say.

All this is underpinned by a solid balance sheet – they’re rated investment grade, which is good. And they’re the sixth-largest global REIT, which means they have easy access to capital. REITs need to raise money to grow, and being big and well-regarded makes it a lot easier to do so. It’s a bit like trying to borrow money – the bank is much more likely to lend to someone with a good credit score and a history of paying their bills.

The Dividend: A 30-Year Streak

The real story, though, is the dividend. Realty Income has increased its dividend every year for the past 30 years. Thirty years! That’s a remarkable achievement, and it speaks to the strength and stability of the business. If you’re looking for a reliable income stream, this monthly-paying REIT should be on your list. And with a yield well above the market average, it’s certainly worth a closer look.

But the most exciting part is what they’re doing to ensure that dividend continues to grow for years to come. They’re building an asset management business, geared towards institutional investors. This is a fee-generating business that leverages what they already do well. Essentially, they’re taking their expertise in owning and managing properties and offering that expertise to others. It’s a big move, and it’s expected to come to fruition in 2026. And it should make Realty Income an even more attractive long-term buy for those of us who appreciate a bit of income with our investments.

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2026-01-22 21:52