Realty Income (O) reported fourth-quarter earnings on Tuesday, missing analyst funds from operations (“FFOâ€) estimates by a penny. Revenues came in at $248 million, actually beating analyst estimates of $230 million by a pretty wide margin.
And you know what? I could really care less what Realty Income did last quarter. Realty Income’s quarterly numbers don’t matter to me. At all. And I say this as a long-term holder of the stock.
Realty Income is one of my very favorite long-term stocks precisely because of its boring disposition. Realty Income doesn’t really “do†anything. It simply buys quality free-standing retail properties that, as a general rule, are already throwing off healthy cash flows and then converts those cash flows into monthly dividends for its shareholders. And as a triple-net landlord, Realty Income doesn’t have to worry about leaky toilets or peeling paint. All maintenance, insurance and taxes are the tenants’ responsibility.
I almost feel sorry for the Wall Street analyst that cover Realty Income. Following a stock that is this steady and predictable must be mind-numbingly boring!
Just for grins, let’s take a look at some of details of the earnings release. FFO per share rose 4.9% for the quarter and 7.1% for the full calendar year. Same-store rents rose by 1.5%, keeping pace with the rate of inflation. The dividend was raised by a modest 2.1%, but this followed a 20% increase the year before. In January of this year, Realty Income raised its dividend again, by 3%.
Over the past 10 years, Realty Income has raised its dividend at a 5% annual clip. That’s very solid for a company whose business model is about as exciting as watching an English cricket match on TV. But the consistency goes beyond that. With January’s dividend hike, Realty Income has boosted its monthly dividend 79 times in the past 20 years and in 70 consecutive quarters. And as a result, Realty Income was rewarded with membership in the exclusive S&P High Yield Dividend Aristocrats Index.
