675 Straight Monthly Dividends. Here’s Why I Keep Adding to This 6% Yielder.

Realty Income, a real estate investment trust (REIT), pays monthly dividends and has made 675 straight monthly payments to investors. This consistency is enough to attract income investors. The company's dividend is well-covered, its portfolio is nearly fully leased, and its stock has performed better than the market during market downturns. With a dividend yield of over 5.6%, Realty Income appears to be an attractive entry point for investors.

Since 1994, when Realty Income went public, the stock has delivered market-beating total returns. However, it is not a fast grower and is unlikely to experience significant growth in the near future. The company's dividend yield of around $3.26 per share, or a 5.6% yield, is covered by cash flow, with a payout ratio of approximately 73%. This leaves room for error and ensures financial stability.

Realty Income's properties are in high demand, with an occupancy rate of around 98.8%, which has remained at or near this level for many years. The company raises rents annually, and when leases are renewed, the new rent typically exceeds the previous rent. Higher rents increase the company's cost of capital, which may negatively impact REITs.

However, Realty Income is still finding ways to utilize its resources. In the second quarter, it invested $2.6 billion at an initial cash yield of 7.3%, which is beneficial for the business. As long as the company can acquire properties that yield more than the cost of funding, higher rates will have a more significant impact on the share price than on the business itself.

Despite its strong track record, Realty Income is a stable investment rather than a fast grower. Investors can expect a long-term total return in the low double digits, combining dividend yield and AFFO (adjusted funds from operations) growth. Since REIT dividends are mostly taxed as ordinary income, investing in an IRA is the best option for those with room in their portfolio.

With a nearly 6% dividend yield paid monthly, covered by cash flow, from a nearly fully occupied property portfolio, Realty Income offers an excellent yield and strong total return potential. This stable business model allows investors to sleep well at night and continue reinvesting and compounding their investment until they need the income.