Is Realty Income the Ultimate Dividend Stock to Own?

There's no shortage of dividend stocks to buy on the markets. But finding good, high-quality ones that offer high yields, dividend growth, and safety is no easy task. To find one that meets all that criteria and that also pays a dividend each month is even more difficult.

There is, however, one that checks off all those boxes: Realty Income (NYSE: O). Could this be the ultimate dividend stock to own that all income investors should consider putting in their portfolios?

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Why Realty Income can be an ideal option for income investors

One of the most attractive features of Realty Income's stock is its 5.2% yield, which is about five times the S&P 500's average yield of just over 1%. For investors seeking out high payouts, Realty Income stands out as a particularly appealing one for its high payout and stability.

The real estate investment trust (REIT) has a wide range of properties in its portfolio, which enable it to do well amid various economic conditions. Its diverse mix of tenants enables it to deliver consistently strong results, which can support not only its high dividend but also sustained growth. The REIT has been increasing its dividend, which it pays monthly, for decades. At $0.2710, its monthly payout has risen by 34% over the past 10 years, averaging a compounded annual growth rate of 3% during that stretch.

While that may not seem all that exciting, it's a steady, manageable rate of growth that has typically been higher than the rate of inflation. That can be extremely valuable to income investors who don't want to see the value of their dividend income diminish over time.

Realty Income might be the best dividend stock to buy right now

There's a lot to like about Realty Income and its dividend. Although the payout is high, it is sustainable, as the REIT has generated $4.2 billion in free cash flow over the past 12 months, paying out $3 billion of that in dividends.

The monthly dividend income sweetens the deal for income investors, as it provides a more frequent stream of cash flow than other dividend stocks, most of which pay quarterly. While Realty Income may not be the only dividend stock to buy, as diversification is incredibly important, it may just be the best income-generating investment to hang on to for the long haul, and it can be a great pillar to build any portfolio around.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.