One Raise at a Time | 96th Raise Since 1994

Concept of how dividend growth investing works, health care, real estate
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Realty Income for yet another dividend increase!
Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?  Dividend growth investing is far from a get rich quick investment strategy, rather you need to remain focused on the long term goal to be successful.

Yesterday the Board of Directors at Realty Income (O) announced yet another increase to their monthly dividend.  The dividend was increased from $0.219 per share up to $0.2195 per share.  That works out to a 0.23% raise.  Realty Income is a Dividend Contender with 24 consecutive years of dividend increases.  Shares currently yield 5.12% based on the new annualized payout.

Realty Income is a bit different from most dividend growth stocks.  For starters they pay monthly rather than quarterly dividends.  In addition to that they typically give multiple raises throughout the year as opposed to one larger increase.  Compared to the year ago payout the new monthly dividend represents a 4.04% increase.

Since I own 96.29 shares of Realty Income in my FI Portfolio this raise increased my forward 12-month dividends by $0.58.  This is the 24th dividend increase I've received from Realty Income since initiating a position in July 2013.  Cumulatively, the organic dividend growth from O has totaled a whopping 20.9% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 6.9%.  

A full screen version of this chart can be found here.

Realty Income might not a be a fast grower when it comes to dividend growth; rather they fall much closer to being that steady rock in your portfolio that serves as a solid foundation.  Dividend growth will obviously fluctuate from year to year, but as you can see in the chart below 4-6% raises should be expected over the longer term.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1970 can be found in the following chart.  

A full screen version of this chart can be found here.

*2018's dividend assumes the new monthly payout of $0.2195 per share is maintained for the rest of the year.

A quick and dirty valuation of Realty Income using the dividend discount model has the shares being more or less fairly valued currently.

Wrap Up

This raise increased my forward dividends by $0.58 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.81% this raise is like I invested an extra $20 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.

So far in 2018 I've received 19 dividend increases combining to increase my forward 12-month dividends by $161.69.  

My FI Portfolio's forward-12 month dividends increased to $6,100.35.  Including my FolioFirst portfolio's forward dividends of $78.54 brings my total taxable accounts dividends to $6,178.89.  My Roth IRA's forward 12-month dividends remain at $337.19.

Do you own shares of Realty Income and do you think they can maintain 4-6% annual dividend growth?

Please share your thoughts below.


  1. Hi JC, Realty Income is one of my long term core holdings. Love the monthly dividends and frequent increases. Tom

    1. Tom,

      Indeed. There's a lot to like about Realty Income. Consistently strong dividend yield, monthly payments and dividend growth every few months is a great combination.

      Thanks for stopping by!

  2. PiP -

    Did not see this happening - LOVING IT!


  3. There is a great deal in order to such as regarding Real estate Earnings. Regularly powerful dividend deliver, monthly obligations as well as dividend development each and every couple of months is a good mixture.


Post a Comment