Realty Income Is Paying More Dividends Than Ever Before and Yields 5.3%. Here's Why Its High-Yield Monthly Payout Is as Safe as It Gets.

Realty Income (NYSE: O) is an attractive dividend-paying stock for many investors due to its long history of consistently raising dividends, which currently stands at 135 times since 1994, including an impressive 115 consecutive quarters. As a Real Estate Investment Trust (REIT), most of Realty Income's rent, over 78%, is generated from the retail sector, including popular companies such as Dollar General, Home Depot, and Walmart. This gives the company a strong track record of stability and reliability.

One aspect that sets Realty Income apart is its monthly dividend payouts, with the latest increase from $0.2705 to $0.271 per share in July. More importantly, the company has demonstrated its ability to generate sufficient cash flow to support these dividends. Investors can assess the safety of Realty Income's dividend through the adjusted funds from operations (AFFO) metric, which measures cash available for distribution.

Management has recently raised its AFFO-per-share guidance to $4.44 to $4.45, up from the previous range of $4.41 to $4.43. In the second quarter, dividends were 74.5% of AFFO, and on an annualized basis, the current dividend rate of $0.271 equates to $3.252. At the conservative end of AFFO guidance, this works out to a yield of 73.7%.

With a dividend yield of 5.3%, Realty Income offers high yields that surpass the S&P 500 index's yield of 1.1%, making it an attractive option for investors seeking passive income. Despite occasional online competition, Realty Income maintains a high occupancy rate (98.6% as of June 30) and steadily increasing rents on renewed leases. This combination of factors contributes to Realty Income's reputation as a safe and dependable dividend stock.