Meet the Monthly Dividend Stock That Has Raised Its Payout 137 Times Since 1994. Here's Why It's a Buy Before the End of November.

Most dividend stocks pay you four times each year. The best ones will try to raise their payments annually. That lower frequency makes a monthly dividend payer that has raised its payment 137 times over the past three decades really stand out.

This outlier is Realty Income (NYSE:O). Known as The Monthly Dividend Company®, this real estate investment trust (REIT) is a great stock to buy before the end of November. Here's why.

Image source: Getty Images.

Timing matters for the next dividend payment

Realty Income recently declared its latest monthly dividend payment. The REIT will pay $0.274 per share on Dec. 15th. That's up 0.9% from the prior month's level. It marked the company's 137th raise since its 1994 listing on the NYSE, while extending its quarterly growth streak to 117 straight quarters. That's over 32 consecutive years of dividend growth.

To receive that next payment, you need to be a shareholder of record as of Nov. 30. If you wait until Dec. 1 to buy shares, you wouldn't receive your first monthly dividend payment until the new year.

A great value proposition right now

Getting in just to receive the next dividend payment isn't the only reason to buy the stock soon. Realty Income currently trades at a very compelling valuation. Its stock price was recently around $60 per share, more than 10% below its 52-week high. At that price, Realty Income's dividend yields 5.5% at its new dividend payment rate. That's a compelling yield in today's market.

The REIT currently expects to generate about $4.45 per share of adjusted funds from operations (AFFO) this year, easily covering its dividend ($3.288 per share). At its current share price, Realty Income trades at just 13.5x earnings. That's very inexpensive for a high-quality REIT.

One reason Realty Income's stock price has fallen is due to the recent uptick in interest rates. The 10-year Treasury is over 5% right now, up from around 4% before the war with Iran began earlier this year. The war has driven a resurgence in inflation, prompting the Federal Reserve to raise rates again.

The Fed's next meeting is in early December. After pausing at its last meeting, the Fed will likely hike rates again next month, potentially by 50 basis points. That could signal to the market that it's serious about bringing inflation down to its 2% target quickly, potentially sparking a relief rally in more rate-sensitive stocks, such as REITs.

The REIT's long-term outlook remains healthy

While there are certainly short-term reasons to buy Realty Income stock sooner rather than later, it's always important to keep the long-term view in mind. The REIT believes it's at the intersection of two massive secular growth drivers. There is a nearly $50 trillion investment need to supply the aging global population with retirement income. Meanwhile, $15 trillion in real estate currently sits on companies' balance sheets across the U.S. and Europe. These drivers are providing Realty Income with new opportunities to invest in income-generating real estate.

Realty Income's recently formed investment management platform allows institutional investors to invest alongside the REIT to help their clients achieve their financial goals. For example, it recently formed a joint venture with Apollo, which is investing $1 billion of insurance capital into a portfolio of U.S. retail properties. The stable cash flows from these properties fit well with the needs of insurance capital, such as annuities, for long-duration, consistent, and contractually secured cash flows.

The company's private capital management platform should accelerate AFFO per share growth by enabling the REIT to make additional investments. That faster growth rate could support higher dividend payments and a higher valuation multiple in the future, boosting its total return potential.

A great investment right now

Realty Income is currently trading at an attractive valuation. Add in its upcoming dividend payment, and it's a great buy before the end of this month. The REIT has a long growth runway, putting it in a strong position to continue increasing its monthly dividend. Its combination of income, growth, and valuation could enable it to deliver strong total returns for investors in the years to come.

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