"I've spent years watching dividend stocks, and Realty Income ( NYSE:O) remains one of the most intriguing income plays in the market. The company calls itself "The Monthly Dividend Company," and at a 5.5% yield with over 30 consecutive years of increases, it's built a reputation as the gold standard for income investors. But with retail under pressure and rates elevated, is this dividend actually safe?"
"As a REIT, Realty Income must distribute at least 90% of taxable income as dividends. The company owns 15,500+ commercial properties under long-term net leases, meaning tenants pay property taxes, insurance, and maintenance. Realty Income collects rent checks. Operating cash flow of $3.76 billion over the trailing twelve months against $2.87 billion in dividend payments gives a payout ratio of 76%, leaving meaningful cushion. When you add back depreciation and amortization, the implied FFO payout ratio drops to around 45%. That's conservative."
Realty Income pays $3.205 per share annually in monthly installments of roughly $0.27 and has made 650+ consecutive monthly payments with 30+ consecutive years of increases. As a REIT, the company must distribute at least 90% of taxable income as dividends and owns over 15,500 commercial properties under long-term net leases where tenants pay taxes, insurance, and maintenance. Trailing twelve-month operating cash flow was $3.76 billion versus $2.87 billion in dividend payments, implying a 76% payout ratio and about a 45% implied FFO payout after adding back depreciation and amortization. Revenue in 2024 reached $5.27 billion, up 29% year-over-year, with EBITDA of $4.33 billion. Total debt stands at $28.9 billion against $39.1 billion in equity (0.74x debt-to-equity) while interest expense rose 28% to $998 million. The 5.5% yield offers about a 126-basis-point premium over the 10-year Treasury at 4.24%, leaving a relatively tight spread for a leveraged REIT with retail exposure.
Read at 24/7 Wall St.
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