Passive income investors like real estate investment trusts (REITs) because their dividends are often high-yielding and reliable. REITs are required to pay out 90% of their income as dividends, which can lead to high payments.
Real estate income (NYSE:O) is one of the best. It is a retail REIT and leases its properties to some of the most stable essential retailers so that it reliably gets its rent and pays its dividends. It has the rare feature of also paying monthly dividends, making it even more attractive to some investors. The stock’s most recently declared monthly dividend is $0.2625 per share, which equates to a forward yield of approximately 5.7%.
Let’s see how much money you would have today if you had invested $1,000 five years ago.
The magic is in the dividend
Dividend-paying companies have generally passed the high growth stage. Investors do not expect high profits from the stock itself. Broadly speaking, the higher the dividend yield, the lower the expectation that the share price will rise.
Realty Income shares are down 4% this year. Because yields work inversely with price, yields have risen as Realty Income shares have fallen. The 5.7% yield at the current share price is more than quadruple the S&P500 average.
If you invested $1,000 in Realty Income stock five years ago, you would have $1,040 today if you reinvested the dividends. That includes an 18% drop in share price. The market is not kind to real estate stocks in the high interest rate environment. Realty Incomes’ stock dividend itself is up 16% over the past five years.
The stock is popular with dividend investors because it comes with Realty Income’s rock-solid stability: It has paid a monthly dividend for more than 53 years, with 107 consecutive quarterly increases.
For passive income investors, Realty Income is a great option.
Should you invest €1,000 in real estate income now?
Consider the following before purchasing shares in Realty Income:
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Jennifer Saibil has no positions in any of the stocks mentioned. The Motley Fool holds positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
If you had invested $1,000 in real estate stocks five years ago, this is how much you would have today. originally published by The Motley Fool
