Charts of the Day: Realty Income (O)

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.

Past performance no guarantee of future results.

The shares are down by about a third from their August 2016 highs and are now sitting at prices first seen in 2013.

Past performance no guarantee of future results.

Due to the share price declines (and to a lesser extent to increases in the dividend payout), the dividend yield is now over 5% again after spending most of the past decade below 5%.

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.

Past performance no guarantee of future results.

Meanwhile, Realty Income continues to raise its dividend like clockwork: 81 consecutive quarterly increases. Over the past 10 years, it’s raised its dividend at about 5% per year, well above the rate of inflation.

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