This Remarkable Monthly Dividend Stock Has Raised Its Payout an Impressive 133 Times

Realty Income (NYSE: O) is one of the most reliable dividend stocks around. The real estate investment trust (REIT) has declared 666 consecutive monthly dividends throughout its history.

Dividend growth has been the company's calling card over the years. It has now raised its monthly dividend payment 133 times since its public market listing in 1994. That steady upward trajectory in the dividend payment will undoubtedly continue in the coming years.

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A remarkable record

Realty Income has a clear mission. The REIT aims to invest in properties that can deliver dependable monthly dividends that increase over time. Its multi-decade track record of dividend growth shows that it has stayed on mission:

Image source: Realty Income.

As the chart illustrates, Realty Income has increased its monthly dividend 133 times over the past three decades, including raising it for 113 quarters in a row. No other company comes close to that level of routine quarterly raises, since most dividend growers deliver annual increases.

A very bankable payout

Realty Income is raising its monthly dividend payment to $0.27 per share, pushing its annualized level to $3.24. It can easily afford that higher dividend level.

The REIT is on track to generate between $4.25 and $4.27 per share of adjusted funds from operations (FFO) this year. That puts its dividend payout ratio at around 76% of its adjusted FFO, a comfortable level for a REIT. The company is on track to produce $843.5 million of adjusted free cash flow after paying dividends this year, providing it with extra cash to invest in new income-generating properties.

The landlord produces very stable cash flow. Realty Income has a well-diversified portfolio of retail, industrial, gaming, and other properties secured by long-term net leases with many of the world's leading companies. The bulk of its rent comes from companies in industries resilient to economic downturns and isolated from the pressures of e-commerce, such as grocery stores, warehouses, and data centers.

Realty Income also has an elite balance sheet. It's one of only 10 REITs with two bond ratings of A3/A- or higher. That strong balance sheet and high credit rating provide it with significant liquidity to fund new investments.

These features provide a strong foundation for the REIT's high-yielding monthly dividend (5.6% current yield).

Many ways to continue growing

Realty Income has grown into the world's sixth-largest REIT with over 15,500 properties across 9 countries. It has primarily done so via a steady diet of acquisitions. The REIT is on pace to invest $6 billion into new property additions this year alone.

Its diversified platform provides it with tremendous opportunities and flexibility. The company estimates that there's a $14 trillion total addressable market opportunity for investing in net lease real estate across the U.S. and Europe. The company has been steadily expanding its opportunity set by adding new investment verticals. For example, in 2023, the company made its first investment in the U.S. gaming market, which is a $400 billion market opportunity. The company also started making credit investments (real estate-backed loans and preferred equity).

The company's diversification strategy has opened the doors to new investment opportunities. For example, Realty Income recently announced an $800 million preferred equity investment in CityCenter Las Vegas, which owns the ARIA Resort & Casino and the Vdara Hotel & Spa. As part of the deal, the REIT has the right of first offer on the future sale of these properties.

Realty Income's diversification also enables it to be highly selective and close only on the best investment opportunities. It sourced $97 billion of potential transactions through the end of the third quarter, while only closing on $3.9 billion of deals. The bulk of its investments was in Europe during the third quarter ($1 billion of its $1.4 billion in investment volume), as they offered a much higher initial weighted average cash yield of 8% compared to 7% for the U.S. investments it secured during the quarter.

With tremendous financial flexibility and a massive market opportunity, Realty Income should have no trouble continuing to expand its portfolio in the future. That should support continued dividend increases.

An ideal passive income investment

Realty Income pays a bankable high-yield monthly dividend that rises each quarter. That steady growth should continue in the future, given the company's robust financial position and massive addressable market. These features make the REIT an ideal stock to buy and hold long-term for durable and growing passive income.

Matt DiLallo has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.