Easy Real Estate Income

Real estate investment trust (REIT) Realty Income (NYSE: O) is a company that Aesop’s tortoise would be proud to own. Since listing on the New York Stock Exchange in 1994, it’s raised its dividend by 4.7 percent annually. That rate isn’t going to win any sprints, but it’s helped the stock deliver a whopping 2,700 percent return for investors who reinvested every dividend.

A slew of retail-store closings in recent quarters has pushed down Realty Income’s share price — and, therefore, raised its dividend yield. The stock recently yielded an appealing 5.4 percent. Retail closings are a valid concern, but selective tenant choices over the years have insulated this particular REIT from the fallout.

Nearly all of Realty Income’s properties are freestanding, single-tenant structures instead of shopping malls. Its largest tenants include Walgreens, LA Fitness, AMC Theatres, Wal-Mart, Dollar General, FedEx and CVS.

Most important, Realty Income specializes in commercial properties rented on a “triple-net” lease basis, i.e., the lessee pays not only rent, but maintenance, insurance and property taxes, too. On top of that, Realty Income generally lets its properties on a long-term basis, with contracts that are in force for 10 to 20 years. This gives the company a reliable revenue stream that’s allowed it to make more than 570 consecutive monthly dividend payments to patient shareholders. It’s a promising candidate for your portfolio.