Recent Buy – Realty Income (O)
The market has seen a lot of volatility lately. Last week saw a lot of DGI bloggers buying consumer staples. Unfortunately for me I was not able to capitalize on the pullback in the market because I had just deployed some capital in a very popular REIT. You have probably heard of it. They go by the name of Realty Income and they are The Monthly Dividend Company.
Back in January of this year I had started a new position in Realty Income. Since this company had dropped down below my cost basis I decided that it would be a good time to add to the position. With all of my recent purchases I am very interested to see what my portfolio allocation is going to look like on the next monthly update.
I am freeing up some more capital as we speak and am looking for more opportunities in the markets but until then let’s look at how I did with this purchase of Realty Income.
Realty Income Stock Data
Annual Dividend: $2.63
Dividend Yield: 5.12%
Dividend Growth History: 22 years
Payout Ratio: 83.4%
Earnings Per Share: $1.10
PE Ratio: 46.60
Recap of Information on Realty Income
Despite all of the negative talk surrounding retail and retail REITs, Realty Income is trending higher than 96% occupancy rate. Their three largest tenants are Walgreens, FedEX and LA Fitness. None of them fit into what I would necessarily consider the retail space but let’s look at them a little farther. None of them are affected by e-commerce and FedEX actually even thrives when e-commerce does. While they aren’t recession proof, I think that Walgreens and FedEX would hold up better than LA Fitness if we were to go into another recession. There overall tenant portfolio is well diversified in case we were to go into another recession so this is not a huge concern for me.
If we look at the industries that they serve we would see some nice diversification as well. The top 3 are drug stores, convenience stores and dollar stores. Again these are not affected by e-commerce and they would also do pretty good during a recession.
Realty Income has been growing it’s dividend every year since going public in 94. They have a compounded average annual rate of 5%.
One of the big advantages that Realty Income has over their peers is their low cost of capital. They are able to borrow money cheaper than their competitors and thus grow their company in the process.
Realty Incomes Impact on More Dividends
I added 16 shares of Realty Income with an average price of $50.00. This addition to my portfolio will add $42.14 to my project annual dividend income not including the compounding factor.
Overall, Realty Income is a great company. They are one of the best at what they do. They have protected themselves from the threat of e-commerce and positioned themselves to still do pretty well during a recession. With their current standing they can continue to grow the company when others might not be able to. They have a long track record of being very shareholder friendly. I have owned them before and truly regret selling that position when I did. Luckily, I have had more opportunities to start building another position. This time I will not be so foolish as to sell. This time around I will just continue to buy more unless the fundamentals change drastically.
Have you recently purchased stock in Realty Income? Do you currently own any shares of Realty Income? If so I would love to hear about it.
As always I look forward to reading all of your comments and questions, until then….. happy investing!
-Jason from MoreDividends.com
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MD, I’ve been looking to add to O in the high 40’s. Missed my opportunity a couple of times. I probably should put in a limit order at 49 and see what happens. Regardless, nice purchase. Tom
Tom from Dividends Diversify recently posted…The New Millionaires | Demographics | Part 3
I imagine there will still be plenty of chances to buy in the high 40s. I know I am hoping to be able to build onto this position some more in the future. Thanks for stopping by Tom.
Realty income is always a good buy. It is a great addition to your portfolio. Comgrats on your buy!
I myself own in my Vrijheid Fonds also Realty Income, and it provides me approx €18 of dividend each month. I love it.
Keep up the good work!
Yeah, Realty Income is a good one. Mine is only producing like $5 a month but I plan to build on this position more in the future. Thanks for stopping by Pollie.
Great dividend stock paying it every month. My price is anove $50.I missed the opportunity to average down when the price was in the high $40’s. Closely watching the price movements ever since.
Glenn recently posted…My First Years of Investing, Part I
Yeah, I got back into this one at a good price. I am holding for now but would add to the position if it got down below my cost basis.