One Raise at a Time | Retail & Real Estate The Perfect Christmas Combo
Earlier this month the Board of Directors at Realty Income (O) approved another increase to their monthly dividend payment. The dividend was increased from $0.2120 per share per to $0.2125. That works out to a 0.24% increase. Realty Income is a Dividend Contender with 24 consecutive years of dividend increase. Shares currently yield 4.57% based on the new annualized payout.
Realty Income is a different breed of dividend growth stock. For starters they pay monthly dividends rather than the more typical quarterly payout. However, another thing that distinguishes them is that they typically give investors multiple smaller raises throughout the year rather than a larger increase just once per year. This latest raise was just 0.24% higher compared to the previous payout; however, compared to the year ago payment it's 4.94% higher. For a company that typically yields north of 4.5% that's perfect for me.
Since I own 95.475 shares of Realty Income in my FI Portfolio this raise increased my forward 12-month dividends by $0.57. This is the 22nd dividend increase I've received from Realty Income since initiating a position in July 2013. Cumulatively since I first bought shares of Realty Income my dividends have increased by 17.0% through organic dividend growth alone. According to US Inflation Calculator the cumulative rate of inflation over that same time is just 5.9%. That's dividend growth investing in a nutshell.
A full screen version of this chart can be found here.
I like to examine the dividend growth rates that a company has doled out over time in order to see whether dividend growth is holding steady, increasing or decreasing. Looking at this gives you an idea of the possible future direction of dividend growth.
Realty Income is one of the premier dividend growth companies out there. They have paid and raised dividends every year since becoming a publicly traded company in 1994. Dividend growth might fluctuate from year to year; however, over time it should settle down around the 4-5% per year level. Considering the shares typically trade at an initial yield of 4-5% that's solidy, steady eddy performance that is hard to overlook.
|Realty Income (O) Annual Dividend and Rolling Dividend Growth Rates|
My forward dividends increased by $0.57 with me doing nothing. That's right, absolutely nothing to contribute to their operations. Based on my portfolio's current yield of 2.71% this raise is like I invested an extra $21 in capital. Except that I didn't! One of the companies I own just decided to send more cash my way.
That's how you can eventually reach the crossover point where your dividends received exceed your expenses. That's DIVIDEND GROWTH INVESTING AT WORK! The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.
Thus far in 2017 I've received 47 dividend increases from 39 companies held in my FI Portfolio increasing my forward 12-month dividends by a combined $267.57.
My FI Portfolio's forward-12 month dividends increased to $5,830.73. Including my FolioFirst portfolio's forward dividends of $76.78 brings my total taxable accounts dividends to $5,907.51. My Roth IRA's forward 12-month dividends are at $318.35.
Do you own shares of Realty Income?
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