Investors who want to cash in on Realty Income Corporation’s (NYSE:O) upcoming dividend of $0.21 per share have only 3 days left to buy the shares before its ex-dividend date, 29 December 2017, in time for dividends payable on the 12 January 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Realty Income’s latest financial data to analyse its dividend characteristics. View our latest analysis for Realty Income
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does Realty Income pass our checks?The company currently pays out more than double of its earnings as a dividend, which suggests that the dividend is not well-covered by earnings by any means. Furthermore, analysts are forecasting the payout ratio to remain at this high level going forward, leading to a future of uncertainty around the stability of O’s dividend income. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of O it has increased its DPS from $1.64 to $2.55 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes O a true dividend rockstar. Compared to its peers, Realty Income produces a yield of 4.57%, which is high for reits stocks.
What this means for you:
Are you a shareholder? With Realty Income producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. However, depending on your portfolio composition, it may be beneficial exploring other income stocks to improve your diversification, or even look at high-growth stocks to supplement your steady income stocks. I suggest continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking into account the dividend metrics, Realty Income ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Whether or not you like Realty Income as a dividend stock, it’s still worth checking the price tag. Can you still benefit from a mispricing of the stock? Take a look at our latest free analysis to find out!