If You Invest $100 Per Month in Realty Income (O) Stock, Here's the Passive Dividend Income It Could Generate Over 10 Years

Realty Income (NYSE: O), one of the world's largest real estate investment trusts (REITs) with 15,500 commercial properties, has raised its dividend 136 times since its public debut. It's also one of the few REITs that pays monthly dividends, and it pays a hefty forward yield of 6%.

What will happen if you invest $100 monthly in Realty Income for 10 years?

Over the past 10 years, Realty Income generated a total return of 33% with reinvested dividends. A $12,000 investment would have grown to about $16,000.

Image source: Getty Images.

But if you had spread that $12,000 investment into $100 monthly investments over 10 years and reinvested your monthly dividends, your investment would be worth $21,450 today. That big gap can be attributed to the magic of dollar-cost averaging and compound returns.

By always investing $100 in Realty Income every month, you'd have bought more shares when its price was lower and fewer shares when it was higher. That dollar-cost averaging approach smoothed out your long-term gains, especially during the interest rate spikes that depressed the stock price. Your reinvested dividends also contributed to those compound gains.

Realty Income should remain a reliable dividend stock for income-oriented investors over the next ten years. But if you simply buy and forget it -- instead of reinvesting and compounding your returns monthly -- you'll likely leave a lot of money on the table.

Leo Sun has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.