Realty Income (O): A High Yielding REIT Income Investors And Retirees Need To Know About
Realty Income (O) is a $50 billion Net Lease REIT that pays a monthly dividend of 26.8 cents which works out to an annual yield of ~5.60%. They call themselves The Monthly Dividend Company since most companies pay dividends quarterly. A Net Lease is one in which the tenant pays rent and many of the operating expenses that a landlord pays under a standard lease.
At the end of 3Q24, O had 15,457 properties representing 336.6 million leasable square feet. Their Annualized Contractual Rent is $4.9 billion. 79% of that comes from retail tenants – many of them low price point – like 7/11 (2.5% of Annualized Contractual Rent), Walgreens (3.3%), CVS (1.2%), Dollar Tree/Family Dollar (3.1%) and Dollar General (3.3%). Other top 20 tenants include Lifetime Fitness, FedEx, Tesco, LA Fitness, AMC Theatres, Walmart/Sam’s Club and Home Depot.
O is geographically diversified including 14.6% of Annualized Contractual Rent coming from Europe – mostly the UK – where they have 483 properties representing 41 million leasable square feet. Within the US, their biggest presence is in Texas where they get 10.3% of their Annualized Contractual Rent.
O has a terrific long term financial track record. Adjusted Funds From Operation (AFFO) – the REIT equivalent of EPS – has grown at a 5% Compound Annual Growth Rate (CAGR) from 1995 through 2023. (O went public on October 18, 1994). When you add the ~6% annual dividend to the ~5% annual increase in CAGR, O has historically given investors a very stable 11% total operational return. I say very stable because O’s Total Shareholder Return Downside Volatility since its October 1994 public listing is 3.6% – the 5th lowest of the 243 S&P companies with trading histories dating back to when O went public.
O is guiding 2024 Same Store Rent Growth to 1% and 2024 AFFO to $4.17-$4.21. At its current price of ~$57.50 share, that’s less than a 14x multiple on 2024 AFFO Guidance. O reports 4Q24 earnings today (Monday February 24) after the market close.
*** If you’re an income investor or retiree interested in putting together a portfolio of high yielding REITs that own the best real estate in the world without the hassle of property management, Top Gun is a specialist in the REIT market. I can put together a diversified portfolio of Apartment, Office, Logistics, Senior Housing, Mall, Net Lease, Single Family Home, Self Storage and Data Center REITs for you that yields 3-4% annually with good capital appreciation as well. Your account will be set up so that Interactive Brokers direct deposits your dividends to your checking account every month. If this is of interest to you, call me at (916) 224-0113 or email me at gfeirman@topgunfp.com ***
