One Stock, $10,000, and Decades of Passive Income: This Is It

There are a lot of things to like about Realty Income (NYSE: O) if you are a dividend investor. In reality, the 31-year streak of annual dividend increases this monthly payer has amassed may be one of the less interesting facts to know about. If you have $10,000 to invest, here's why you may want to put it to work in Realty Income today.

Realty Income is a conservatively run industry giant

Realty Income is a real estate investment trust (REIT) that focuses on single-tenant retail properties. That means its tenants have to pay most property-level operating costs, which reduces the landlord's risk. Realty Income is the largest player in the space, with a portfolio of over 15,500 properties. The core of its portfolio is made up of properties that consumers visit regularly, including assets like grocery, convenience, and home improvement stores.

Image source: Getty Images.

In addition to retail properties (79% of rents), the REIT also owns industrial assets and other unique properties, such as casinos and data centers. Its portfolio is spread across North America and Europe as well, offering investors meaningful geographic diversification. More recently, the company has begun offering investment management services to institutional investors, adding another income stream to the mix. The business sits atop an investment-grade-rated balance sheet, so the financial foundation is rock-solid. The business's strength was highlighted during the Great Recession, as occupancy didn't fall below 96%.

Realty Income has a long and successful history of offering dividend investors an attractive yield backed by slow and steady dividend growth. The REIT's 5.1% yield is well above the market, and the dividend has grown at a compound annual rate of roughly 4.2% over the past 31 years. That's slightly faster dividend growth than inflation, meaning the buying power of the dividend has grown over time.

Realty Income will not excite you

The one problem with Realty Income is that it is shockingly boring. That's by design, but you have to go in understanding that the company is a bit of a tortoise. The dividend yield is going to be a large part of your return, but if history is any guide, the REIT will provide you with decades of reliable dividend growth. That's why conservative dividend lovers should be more than happy to add the 160 shares that $10,000 can buy. Then you can sit back, collect the passive income you are generating, and sleep well at night, even during recessions and bear markets.

Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.