Realty Income Corp (O) Giving Shareholders a 4th Raise this Year

We may earn money or products from the companies mentioned in this post.

For the past 9+ years, my wife and I have been building a sustainable income stream that grows year after year. Although we didn’t know it at the time, when we bought our first share of a stock that paid dividends … we were heading down a path to financial independence.

Over those years, investing in dividend paying stocks has helped build a $2,400+ extra income stream this year alone. And that number will likely grow to $3,000 in dividend income next year.

Much of our growth in this income stream has been a direct result of new investments made in dividend stocks over the past 3+ years. The fastest way to grow your dividend income is to invest new money into top stocks.

And even though we are growing our income through new investments, there are a couple other ways to boost dividends year after year. One way is to take all those dollars you are earning from dividends and reinvest them. We currently reinvest every single dividend income dollar we earn into more stocks.

The other way to boost dividend income is the easiest and takes no work on your part. Most quality dividend stocks will actually give you a raise every year without lifting a finger!

One such stock that has been handing out raise after raise (i.e. dividend increases) since we purchased it is Realty Income Corporation (O).

This company is a Real Estate Income Trust and continues to pay a solid dividend that increases several times per year.

High Yield Real Estate Income Trusts

Screening for a Real Estate Income Trust (or REIT) is a LOT different than looking for traditional dividend stocks like a Walmart (WMT) or McDonalds (MCD).

Most of the time, REITs don’t fit with our dividend stock selection requirements. But that doesn’t mean they don’t make good income investments.

For example, a REIT will have a payout ratio much greater than 60%. For the majority of stocks we purchase, the dividend payout ratio is well below that threshold.

Even though a REIT may have a very high payout ratio, there is still a place in our portfolio for them.

At the time of this writing, high yielding REIT’s make up about 14.3% of our portfolio from 2 different stocks (O, and OHI).

In the case of Realty Income Corporation (O), they currently pay out a monthly dividend and normally give their shareholders a raise several times per year.

Investing a small portion of our portfolio in REIT’s has allowed us to increase our dividend yields.

Investing in Dividend Stocks – Realty Income Corporation (O)

Almost 2.5 years ago (April 2015), we made our initial investment in Realty Income Corporation (O) by purchasing 5 shares of stock. Since that time, we have increased our total shares of O up to 63.

Our total cost for these 63 shares is $3,265.82, which gives us an average share price of $51.84.

Each of these shares were purchased through our Robinhood account, which means we didn’t spend any additional dollars on brokerage commissions or fee’s. That has allowed us to spread our investment dollars further.

Join Robinhood and we’ll both get a share of stock like Apple, Ford, or Sprint for free.

To date, we have earned $218.95 in dividend income from owning shares of Realty Income Corporation (O). Since Robinhood does not offer DRiP, we have used this income to reinvest into various companies.

Overall, we have earned back over 6.7% of our original investment just from dividends.

Realty Income Gives another .24% Raise

It was about three months ago, when I discussed how Realty Income Corporation gave us a small raise. That was after the company gave us a small .24% raise in the spring and an awesome 4% raise at the beginning of the year.

So after a couple months of no increases, the company is back at it again giving us another raise!

The latest increase was just like the last two .24% bumps. But after the 4% raise back in January and several small raises later … who can complain?

Plus, we didn’t spend any time working to get this raise. We got the raise simply because we invested in the company and have held onto our shares.

Realty Income Corporation plans to give shareholders a monthly dividend increase of 0.24% starting in October.

We will receive $.2120 in dividends this coming October (2017) for each share that we own … instead of $.2115 the last couple of months. It may not seem like a huge increase, but month to month I think that is great!

This latest increase bumps the annual dividend for O up to $2.544 per share (from $2.538). That is a 0.24% increase.

Combined with the last several increases, these small dividend hikes can really add up over the course of a year.

Looking back at the start of 2016 … the company was paying $.1910 per share. Since that time, the company has raised it’s monthly dividend by 10.99%!

How Much Extra Income?

This latest dividend increase has pushed our 12 month forward dividend income for O up to $160.27, compared to $159.89 last month.

That is an extra $0.38 in our pocket. Nothing to get crazy about … but it is still growth.

This latest increase is another reminder that our dividend income stream is constantly growing without any extra work from us.

And if everything goes well with the company, there is a very good chance they will continue to raise their monthly dividend in 2018.

This most recent increase (along with several others) has helped to push our projected annual dividend income up to $2,720.02.

Every little bit counts when it comes to building this portfolio and dividend income stream. I just love to see this slow and steady growth!

Conclusion

It doesn’t matter if we get a dividend raise of 21.4%, a 17% increase, or as in this case 0.24%.

When it comes to earning more income, we will always celebrate a dividend increase from one of the many stocks we own. These small dividend increases represent mini raises to our income that are spread out through the year.

The .24% we got just now, plus the .24% raise we got in June, plus the .24% raise we got in March, plus the 4% raise in January, … all add up over the year. As time passes, these increases begin to compound and earn more and more income.

In the short term, we have a goal to grow our 12 month forward dividend income to $3,000 by the end of 2017. This latest increase will help us continue to push towards that goal … despite it being a very small step.

Do you own any stocks that pay monthly dividends? Do you get excited about these small monthly increases that add up over a year?

Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – O and OHI. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.

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Glen - September 15, 2017

I’m new to this blog and I’ve only skimmed parts of it so apologies if I’m missing something. But I don’t get the focus on dividends. I’ve read other blogs where people recommend dividend stocks (or mutual funds), and the focus is on overall investment increase (e.g. CAGR), not just on the dividend. Dividends are useful to increase the overall CAGR or to mitigate losses when equities fall, but they are only one part of an investment increase. But your blog focuses so much on the dividends that you hardly even mention the overall investment increase. Yes, the overall investment value is buried in your net worth statements, but you don’t seem to talk about the value of your investments at all (or very little) in the blog posts (the ones I’ve skimmed) where you go into excruciating detail about your dividend income each month and the dividend rates of various companies you have stock in.

From the net worth page, you have over $400,000 in investments (which are primarily if not totally dividend stocks), and you say that you hope to earn about $3000 in dividend income over the course of 2017. That’s not even 1% investment return for the year. Some money market accounts give a better return than that – with zero risk compared to stock. Likewise many bond yields are typically better than that. So if all you want is an income stream, like your blog seems to say (or at least what it emphasizes most of the time), there are better ways to get it.

Hopefully your overall investment portfolio is increasing by much more than the 1% dividend return you are getting. E.g., the S&P CAGR over a long time period is typically above 8%. I would be more excited to read a blog that talks more about whether you are achieving a high overall investment return, rather than the 1% or so dividend return you seem to be getting.

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