Attention dividend hunters! Realty Income Corporation (NYSE:O) will be distributing its dividend of $0.22 per share on the 13 April 2018, and will start trading ex-dividend in 3 days time on the 29 March 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. Check out our latest analysis for Realty Income
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is their annual yield among the top 25% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Will the company be able to keep paying dividend based on the future earnings growth?
How does Realty Income fare?Although REITs are expected to payout a high portion of the earnings, Realty Income currently pays out more than double its net income, which suggests that the dividend is not well-covered by earnings by any means. Going forward, analysts expect O’s payout to fall to 183.52% of its earnings, which leads to a dividend yield of around 5.48%. In addition to this, EPS should increase to $1.36, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of O it has increased its DPS from $1.65 to $2.63 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Realty Income has a yield of 5.34%, which is high for REITs stocks.
Considering the dividend attributes we analyzed above, Realty Income is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three essential aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for O’s future growth? Take a look at our free research report of analyst consensus for O’s outlook.
- Valuation: What is O worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether O is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.