It's possible to generate a lifetime of passive income by investing in dividends. It's important to invest in companies with a strong track record, stable balance sheet, and long-term growth opportunities in order to earn consistent and reliable dividends.
Real estate investment trust is one stock that checks all of those boxes. This real estate dividend stock is an ideal investment for long term wealth building.
The net lease business has been a part of the company's existence for over 50 years. A variety of commercial properties are leased to tenants in over 70 industries on long term leases of 10 years or more.
The largest net lease operator in the world has grown its portfolio to over 11,000 properties. It's portfolio growth isn't the only thing that makes it stand out. Since 1995, the REIT has increased its dividends 27 times, earning it a place as an esteemed Dividend Aristocrat.
Realty Income Corporation As dividends grow, so do returns. If you bought 100 shares of Realty Income in 2012 you would have earned a 10% return over the course of 10 years. A good return, but not everything you would have received.
You would have earned a total of $25.17 in dividends per share, or around 60 percent of your original investment, if Realty Income had increased its dividends by as much as it did during that time.
A stable balance sheet is an important factor in the payment of dividends. Eventually dividends will be cut if the company is overleveraged because it doesn't have enough income to pay its debts.
There is a seemingly stable balance sheet with net debt to earnings before interest, taxes, depreciation, and amortization of less than 5 times. It's within the range of its peers. The credit rating is A. The company has a good amount of coverage for its current payouts and room for growth.
New stock being issued to raise capital has a dilutive effect on share values. Its adjusted funds from operations have decreased over the past decade. The company is using the money well. About 5,000 properties were acquired from 2020 to 2021. It has diversified its holdings and helped grow revenue.
In the retail industry, it's very picky when it comes to who it rents to. Tenants with strong credit ratings are the majority of its income. A variety of essential retailers like restaurants, convenience stores, and discount stores help deliver consistent income to the company.
Diversification is one of the benefits of being a real estate investment trust. The company's recent acquisitions have helped it earn more from industrial properties and less from other properties. One of the fastest-growing and highest-demand real estate industries right now is industrial real estate, which gives the company exposure to the e- commerce industry. That's a smart move for a company that invests a lot in retail.
Being a global operator allows for expansion into new countries and markets. Less than 10% of its rents come from outside the US or U.S. territories, but that is likely to grow in the future. Up to $60 billion in new opportunities have been identified by the REIT, which has spent over $3 billion on acquisitions to date. There are plenty of growth opportunities and there is reason to believe that they should continue.
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