How Much Would You Need in Realty Income (O) Stock to Collect $500 a Month in Dividends?
Key Points
Realty Income is a longtime dividend payer with a generous dividend yield.
It has built a solid business with reliable income from long-term leases.
- 10 stocks we like better than Realty Income ›
Anyone seeking dividend income should check out Realty Income (NYSE: O).
It's a real estate investment trust (REIT) -- a company that owns lots of real estate properties, leasing them out to tenants. Since REITs are required to pay out at least 90% of their taxable earnings as dividends, they tend to sport meaningful dividend payouts, and their yields tend to be higher than the average stock.
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Realty Income's dividend yield these days is hovering around 5.3%.
Image source: The Motley Fool.
Let's say you want $500 per month ($6,000 annually) in dividend income from Realty Income. How many shares should you buy? Well, its recent monthly payout was $0.271. So divide $500 by that and you'll get 1,845 shares. At a recent share price of $62, those shares would cost you $114,390.
Why invest in Realty Income?
There are multiple reasons to consider buying Realty Income. For example:
- That fat dividend will grow over time, and it is paid monthly, not quarterly.
- The stock's valuation is attractive, with a recent forward-looking price-to-earnings (P/E) ratio of 35, below the five-year average of 40, and a recent price-to-sales ratio of 9.6, below the five-year average of 10.5.
- If you're worried about the stock market crashing this year, Realty Income has a low beta of 0.72, meaning that it tends to rise or fall less than the overall market. So if the S&P 500 drops by, say, 10%, Realty Income's stock might fall by around 7.2%, based on past performance.
- It owns approximately 15,500 leased properties across all 50 states and parts of Europe, and they span 92 industries. That diversity is important.
- It employs triple-net leases, which require tenants to cover real estate taxes, property insurance, and operating expenses. That keeps things simple for the company and reduces its risk.
- Its portfolio occupancy level was recently 98.8% and has never been below 96%.
- It's looking to juice its growth via data centers. It's partnering with other companies to develop data centers.
Give this solid dividend payer a closer look if you're seeking income.
Should you buy stock in Realty Income right now?
Before you buy stock in Realty Income, consider this:
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Selena Maranjian 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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