Realty Income Corp (O) Announces 94th Raise
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For close to 10 years now, my wife and I have been building a sustainable income stream that grows larger and larger every year. Even though we didn’t know it at the time, but when we bought our first share of a stock that paid dividends almost a decade ago … we took our first step towards financial independence.
Since that first stock purchase, we have continued to invest new money every year while reinvesting any dividend income we earned to take advantage of compounding returns. For example, this year (2017) alone we are on pace to earn almost $2,600 in dividends! Each penny of that amount has (or will be) invested back into income producing stocks. And next year that total will grow even more … when we expect to earn over $3,000 in dividend income.
So as you can see … new investments and dividend reinvestment’s have both helped us grow our income. But there is a 3rd method that helps us grow our income which comes from company dividend increases. Almost every company that we have invested in raises their dividend payout every year. Some companies even hand out multiple increases in a 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 marks the 94th dividend increase from this Real Estate Income Trust (REIT).
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 Target (TGT) or Johnson and Johnson (JNJ).
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.
And 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% of our taxable portfolio from 2 different stocks (O, and OHI). That is a bit higher than we would like, so we haven’t been actively investing new money in REIT’s.
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.
We have always been interested in investing a portion of our assets in real estate and have considered rental properties. However, we don’t feel comfortable buying a rental property and instead put our assets into REIT’s for now.
Investing in Dividend Stocks – Realty Income Corporation (O)
Just over 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 64.
Our total cost for these 64 shares is $3,320.74, which gives us an average share price of $51.89.
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 $272.35 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 … and in some cases invested in new shares of O.
Overall, we have earned back over 8.2% of our original investment in O … just from dividends.
Realty Income Hands Out Another .24% Raise
Back in October (2017), Realty Income Corporation gave us a small raise just like the one we are going to get in January (2018). That was on top of the small raises we got last summer (.24%), last spring (.24%) and the big 4% raise at the beginning of the year (2017). Combined, the company managed to increase dividends by over 10% last year … so a .24% raise this coming January will likely be just the beginning for 2018!
The latest increase was just like the last three bumps of .24%. Hopefully this will be the start of a continued year of growing dividends by double digits for the company.
One thing I love about this raise is that we didn’t spend any time working to get it. 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 January (2018).
We will receive $.2125 in dividends this coming January (2018) for each share that we own … instead of $.2120 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 $2.550 per share (from $2.544). 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.
How Much Extra Income?
This latest dividend increase has pushed our 12 month forward dividend income for O up to $163.20, compared to $162.82 last month.
That is an extra $0.38 back in our pocket. And no … this is 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 multiple times in 2018.
This most recent increase (along with several others) has helped to push our projected annual dividend income up to $2,8201.29.
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!
Investing in Realty Income Corp.
When it comes to earning more income, we like to 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. And they keep happening year after year!
Each dividend increase we get compounds over time … which helps our income grow exponentially. As time passes, these increases begin to compound and earn more and more income.
Do you own any stocks that pay monthly dividends like Realty Income Corp.? 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.