Realty Income Yields 5.2%. Here's Why the Payout Keeps Growing.

Realty Income (NYSE: O) is one of the largest REITs in the country, known for its consistent monthly dividend payments that have increased for 115 consecutive quarters. Its structure is attractive because it operates through triple net leases, where tenants cover property taxes, insurance, and maintenance costs, allowing Realty Income to pass on rising base rents to shareholders.

The company's portfolio of over 15,588 properties is heavily weighted towards all-weather industries, such as retail, with a 78% concentration in retail properties. This includes supermarkets and convenience stores, which remain essential even during economic downturns or inflationary periods.

While Realty Income's dividend has grown for 31 consecutive years, it's important to note that the REIT itself has not always been on an upward trajectory. Investors should be aware that there can be periods of decline. Despite this, since its debut in 1994, Realty Income has delivered a return that surpasses the S&P 500, doubling its performance. However, some investors might not consider Realty Income as a top pick according to the Motley Fool Stock Advisor's latest list, which includes 10 recommended stocks.

Before investing in Realty Income, potential investors should weigh its advantages against its risks, especially considering the company's substantial concentration in retail properties. It is always wise to research and consider professional opinions, such as those from the Motley Fool Stock Advisor, when making investment decisions.