Realty Income Corp (O) Giving Shareholders a Christmas Bonus
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It happened again … we got another raise! Actually, it felt like we got a small Christmas bonus that will continue to pay year after year.
No matter how large or small, I like to celebrate when my family gets a raise.
Just this month, we received another bump to our income. It wasn’t a huge raise and it didn’t come from my employer.
The annual income increase came from one of the stocks we own in the Money Sprout Index – Realty Income Corporation (O).
It wasn’t that long ago when I reported how we received a 6.50% raise from owning shares of Sysco Corporation (SYY).
This month … the raise came from one of our high yielding real estate trusts (O), which has been increasing their monthly dividends throughout the year.
High Yield Real Estate Income Trusts
Investing in Real Estate Income Trusts (REIT’s) is a bit different than traditional dividend stocks.
These types of income investments don’t meet our dividend stock selection requirements.
Most of the time, a REIT will payout much more than 60% of their earnings in dividends. We normally pick stocks that have a dividend payout ratio of 60% or lower.
And while real estate trusts don’t fit with our overall dividend investment strategy, we have made an exception for a small percentage of our portfolio.
High yielding REIT’s currently make up about 12% 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)
We made our initial investment of Realty Income Corporation (O) back in April 2015, by purchasing 5 shares. Since that time, we have made additional investments and have increased our total shares 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 $134.46 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 7% of our original investment just from dividends.
We Got a .25% Raise
Realty Income Corporation recently announced another monthly dividend increase.
We will receive $.2025 in dividends this coming January for each share that we own … instead of $.2020 last month. It may not seem like a huge increase (.25%), but month to month that isn’t too bad.
This latest increase bumps the annual dividend for O up to $2.43 per share (from $2.424). That is a .25% increase.
Even though a quarter percent increase doesn’t seem like much compared to last month, over the course of a year these small increases add up. You see, Realty Income Corp has increased their monthly payout several times this past year.
At the start of 2016, the company was paying $.1910 per share. So in reality, the company has actually increased their annual dividend by 6.0%! That is the level of annual dividend growth that we are looking for in building this portfolio.
This 6.0% increase in our annual income, plus last month’s 6.5% raise from Sysco Corporation, plus all the other increases can really start to make a big difference.
How Much Extra Income?
This latest dividend increase has pushed our 12 month forward dividend income for O up to $97.20, compared to $96.96 last month.
Our future annual dividend income last January on 40 shares would have been $91.68, which shows good growth compared to last year.
Even though we are only earning $5.52 more this year compared to last, this latest increase is a reminder that our dividend income stream is constantly growing.
It is always growing on its own.
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 dividend in 2017. Next time this year we could be discussing additional increases.
As we near the end of 2016, this latest announced increase (along with many other factors) has helped to push our projected annual dividend income up to $2,221.50.
I love to see this slow and steady growth!
Our family always will celebrate these dividend raises … as I like to call them.
No matter if they are a quarter percent bump, like what we got this month … Or if it is a double digit increase like we have seen from other stocks in our portfolio. Each increase helps our long term goals.
Looking at the dividend growth for Realty Income Corporation over the past year, they have actually given their shareholders a 6.0% raise.
I don’t know about you … but I can’t remember the last time I got a raise like that from my employer.
At least not a raise like that consistently year after year.
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, OHI, and SYY. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.