This Magnificent Dividend Stock Is Accelerating Its Growth by Adding $1 Billion to Its Acquisition Target

Realty Income (NYSE: O) is a top-notch dividend stock with a track record of increasing its dividend for 107 consecutive quarters. Currently offering a monthly payout yielding nearly 6%, which is significantly higher than the S&P 500’s 1.3% dividend yield.

The REIT has set a low bar for property investments this year, initially planning to invest about $2 billion, much lower than its usual annual investment volume of around $9 billion. This cautious approach is due to challenging market conditions, aiming to keep investment spending within its means without outside financing.

Realty Income’s strong financial position, with a low dividend payout ratio and a solid balance sheet, allows it to generate over $800 million of annual free cash flow after paying dividends. The recent merger with Spirit Realty worth $9.3 billion is expected to boost its adjusted funds from operations (FFO) per share by more than 2.5% this year.

The company’s optimism for securing new investments and outside capital has grown throughout the year, leading to an increase in its acquisition volume target by $1 billion. With a focus on Europe, where high investment yields are available, Realty Income aims to further boost its investment volume with attractive funding opportunities.

Realty Income estimates that for every $1 billion of investments made at an 8% yield, it can deliver 0.5% of incremental adjusted FFO per share growth. As interest rates are expected to decrease, the REIT’s weighted average cost of capital should decline, enabling it to make more accretive deals with lower initial investment yields.

Overall, Realty Income’s strong dividend growth and optimistic outlook for future growth make it an attractive option for investors seeking a high-yielding and steadily rising stream of monthly dividend income.