Realty Income Corp (O) Giving Shareholders a Second Raise this Year
In order for my wife and I to invest in a dividend stock, it must have a rock solid dividend history. That means we need to see sustainable dividend growth over the past 5 … 10 … or even 20+ years.
So if a company is not raising their dividend every year (hopefully by 6% or more), we move on to the next stock. However, if a company shows continued growth year after year … then we look at other factors such as dividend growth rate, payout ratio, P/E ratio, etc.
Why do we look at past dividend growth performance? Because we want to invest in companies that will give us a raise this year, and next year, and 5+ years from now.
Our goal is to own solid companies that pay a sustainable dividend that increases every single year.
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 Trusts and continues to pay a solid dividend that increases several times per year.
High Yield Real Estate Income Trusts
Screening for Real Estate Income Trusts (REIT’s) is much different than traditional dividend stocks for us.
Most of the time, REITs don’t fit with our dividend stock selection requirements.
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 13.1% 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 years ago (April 2015), we made our initial investment in Realty Income Corporation (O) by purchasing 5 shares. Since that time, we have increased our total shares of O up to 40.
Our total cost for these 40 shares was $1,930.50, which gives us an average share price of $48.26.
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.
To date, we have earned $159.40 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 about 8.3% of our original investment (up from 7.4%) just from dividends.
We Got a Small Monthly Raise
It was two months ago, when I discussed how Realty Income Corporation gave us a 4% raise. After no increase last month, the company continued to increase it’s annual dividend with this latest bump.
The latest increase was a tiny .24% bump. But after the 4% raise back in January … 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%!
We will receive $.2110 in dividends this coming April (2017) for each share that we own … instead of $.2105 the last 2 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 $2.532 per share (from $2.526). 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 10.5%!
I got a raise last year from my employer … but certainly not a 10% raise. Plus I had to work hard for that raise at work. I didn’t really do much other than buy and hold shares of Realty Income Corp. to get their raise.
How Much Extra Income?
This latest dividend increase has pushed our 12 month forward dividend income for O up to $101.28, compared to $101.04 last month.
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 2017.
This most recent increase (along with several others) has helped to push our projected annual dividend income up to $2,339.17.
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!
It doesn’t matter if we get a dividend raise of 21.4% 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 30+ stocks we own. These small dividend increases represent mini raises to our income that are spread out through the year.
The .25% we got from Realty Income Corp. last December, plus the 4% raise in January, plus the .24% raise we got in March … 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.