I Just Bought More Realty Income (O) Stock. Here’s How Many Shares It Takes to Collect $1,000 a Month.
Key Points
Realty Income has paid a monthly dividend for over half a century.
It has grown its payout by more than 4% annually since its 1994 public market listing.
The REIT is in a strong position to continue increasing its dividend.
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I recently bought six more shares of Realty Income (NYSE:O). I now own 113 shares of the leading real estate investment trust (REIT). Those new shares will increase the monthly dividend income I'm receiving from the company.
My purchase made me curious what it would take to generate $1,000 of dividend income each month from Realty Income. Here's a look at how many shares it would take to reach that income level and what makes it a top monthly dividend stock to buy for income.
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The math to $1,000 in monthly dividend income
Realty Income recently announced its 676th consecutive monthly dividend (more than 56 years). It's currently paying $0.2715 per share each month ($3.258 annually). At that rate, my 113 shares generate $30.68 in dividend income each month ($368.15 annually). I have a long way to go to reach $1,000 a month.
At the REIT's current monthly dividend rate, an investor would need to hold 3,583 shares to generate about $1,000 of dividend income each month starting now. That would cost over $206,250 at its recent share price ($56).
That's a lot of money, and much more than I'd want to invest in a single stock, given my portfolio's current size and my need for growth, as I'm still years away from retirement.
Realty Income is The Monthly Dividend Company®
While I'll probably never own enough shares of Realty Income to collect $1,000 of dividend income each month, I'm still making it a core income holding to anchor my future retirement. That's because the REIT offers a high dividend yield (recently 5.8%), has a long record of dividend increases (136 raises and a 4.1% compound annual growth rate since its public market listing in 1994), and backs its dividend with durable cash flows and a fortress financial profile.
The REIT's high-yielding dividend should continue to grow. Realty Income owns a diversified portfolio of retail, industrial, gaming, data center, and other properties secured by long-term net leases with many of the world's leading companies (most in industries resilient to economic downturns). This portfolio supplies it with very durable, steadily rising income. Meanwhile, it has an A-rated balance sheet and strong post-dividend free cash flow (nearly $1 billion in annual adjusted free cash flow), giving it the funds to continue investing in new income-generating properties. With an estimated $15 trillion of real estate across the U.S. and Europe suitable for net leases, Realty Income has a very long growth runway.
An income anchor
Realty Income has a high current yield, pays a steadily growing monthly dividend, and has a very strong financial foundation. Those features make it an ideal income investment. That's why I'm steadily growing my position in this top-tier income stock to anchor my future retirement income strategy. While I probably won't reach $1,000 in monthly dividend income from the REIT, it will still likely be a major contributor to my future retirement income as I continue building this position.
Should you buy stock in Realty Income right now?
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Matt DiLallo has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
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