Realty Income (O) Stock Pays Dividends Monthly. Does That Actually Make It a Better Dividend Stock?
Key Points
Realty Income is a huge real estate company, with an attractive business model.
Monthly payouts can make finances more predictable and easy to manage in retirement.
Realty Income (NYSE: O) is one of the relatively few dividend-paying companies that pays out each month, instead of quarterly. It's also a real estate investment trust (REIT) -- a company that owns lots of real estate properties, leasing them out to tenants -- and its dividend recently yielded a hefty 5.9%.
Does the fact that Realty Income pays monthly make it a superior dividend stock? My answer would be yes -- and no. Here's why it's a nice plus.
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Imagine living in retirement. You no longer have a regular paycheck coming in, and you're getting by with Social Security benefits, some other income sources, and dividend income. Your income, therefore, is probably lumpy -- more in some months, less in others. It can be helpful to know that however much dividend income you're getting from Realty Income, you'll get it every month.
Image source: The Motley Fool.
Overall, though, I don't think it will make much difference to most people. If most of your dividend income is from this one stock, then maybe getting it monthly is better. But if you own a range of dividend payers, they will each be paying you at different times, so that income will end up spread out throughout the year -- not exactly evenly, but perhaps evenly enough.
Should you invest in Realty Income?
I would certainly consider investing in Realty Income. (I own some shares myself.) The company is quite impressive. It uses "triple-net leases," which have the tenants responsible for paying real estate taxes, property insurance, and operating expenses. And it owns a lot of properties -- recently more than 15,500, leased with long-term contracts -- to around 1,800 clients. It's focused on retail, industrial, and agricultural clients, and it encompasses about 90-plus industries. Top industries include grocery stores, convenience stores, home improvement stores, and dollar stores.
Want more? Its overall occupancy level for its properties was recently 98.8% -- and it has never been below 96%. Realty Income offers stability and a rather dependable dividend.
Selena Maranjian has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.