Realty Income (O) is one of my favorite long-term dividend payers. I own a decent chunk of shares in an IRA that I have pledged never to sell. The reinvested dividends are compounding, and I intend to live on them in retirement someday.
But other than the reinvested dividends, I haven’t been buying new shares in recent years because they price just wasn’t compelling enough. After the beating the shares have taken of late (the entire REIT sector has been battered due to rising long-term bond yields), I figure it’s time to reevaluate.
Of course, the dividend yield by itself doesn’t mean much unless you compare it to something. Realty Income’s 5.4% dividend yield is about 2.5% higher than the 10-year Treasury yield. That’s within the normal range of the past decade, albeit on the higher end of that range.
Realty Income might not be the steal it was back in 2008. But at today’s prices, it’s worthy of new money. You’re not going to get rich quick in it, but it beats the death by 1,000 inflation cuts that you’re likely to get in a traditional bond portfolio.
Disclosures: Long O