Where Will Realty Income Be in 10 Years?

Realty Income (NYSE: O) has a marketplace headdress of astir $60 billion. It owns implicit 15,500 properties dispersed crossed the United States and Europe. It is, by far, the largest nett lease existent property concern spot (REIT) you tin buy. Here's wherefore that's a bully happening and what it apt means for the adjacent decade.

Realty Income's tenants wage for astir of the property-level costs associated with the assets they occupy. That is known arsenic a nett lease, which materially reduces concern hazard for Realty Income. In the end, galore of the transactions the institution enters into crook retired to beryllium financing events for the seller, who usually becomes the property's tenant successful a sale-leaseback transaction.

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Effectively, the seller raises currency for growth, oregon different things, without having to pat the superior markets. But due to the fact that of the nett lease structure, the seller inactive retains effectual power of the property. Real property concern trusts similar Realty Income get committed tenants, agelong leases, and regular rent increases. It's beauteous adjacent to a win/win deal.

In a sale/leaseback transaction, 1 of the astir important factors for the seller is certainty. The seller wants to cognize that the purchaser tin spend the woody and that the woody tin beryllium completed rapidly and efficiently. Given Realty Income's size and beardown operating history, it has nary occupation competing connected these factors. However, it besides has the payment of advantaged entree to superior markets acknowledgment to its size and fiscal spot (it is concern people rated).

These affirmative attributes aren't apt to alteration implicit the adjacent 10 years. In fact, Realty Income's advantages are much apt to summation implicit clip than decrease, arsenic it continues to summation scale. That's really the inclination successful different REIT sectors arsenic well, highlighting the dominance of $125 cardinal market-cap Prologis (NYSE: PLD) successful the warehouse niche. This has important implications for dividend investors.

Right now, Realty Income is offering an charismatic 5% dividend output backed by 31 consecutive yearly dividend increases. While the output volition alteration from time to day, fixed the size and spot of Realty Income's concern and management's blimpish nature, successful a decennary the institution is apt to beryllium reporting it has deed 41 yearly dividend increases.