Realty Income(NYSE: O) stock gained 14% in November, according to data from S&P Global Market Intelligence. It benefited from an overall market rally as well as positive indications about the real estate market.
Realty Income is a REIT leader
Realty Income is a real estate investment trust, otherwise known as REIT. As a group, REITs are excellent dividend stocks to own because they have a fairly steady revenue stream and pay out 90% of proceeds as dividends. But not all REITs are the same.
Realty Income stands out from the pack primarily because it pays a monthly dividend. But there are other reasons it's an attractive dividend play. It has raised its dividend for 104 consecutive quarters, not just annually, with a monthly streak of 640 consecutive payments.
It's one of the largest REITs in the world. In 2021 it acquired VEREIT, which almost doubled its property count to what's now more than 13,000. That move helped it diversify more by industry and tenant, but it still has a retail REIT model that caters mostly to the kinds of chain stores that are reliable for sales growth and rent. Its two largest concentrations are Walgreens and Dollar General, and some of its other top 20 tenants include Walmart and CVS Health.
It just announced another acquisition set to go through in a few months in Spirit Realty. Not only does this move expand its portfolio of properties and further diversify its tenant base and industry, but management said it also creates efficiencies with accretive margins, making it a great deal for the company and shareholders.
Realty Income stock is a dividend powerhouse
Realty Income, like most REITs and the real estate industry in general, has been struggling in the high-interest-rate environment. Its stock was sinking for several months. But there were several positive indicators for the industry and the economy in general in November. Inflation looks to be cooling off, with the Consumer Price Index unchanged from October. Many experts believe the Federal Reserve is done raising interest rates and may even begin to cut them in the coming months, and Chairman Jerome Powell said he believes current policy is properly balanced. These developments helped the market rally in November, with the S&P 500 up more than 8%, and many stocks rising along with it.
Realty Income stock is still down 14% in 2023, and at this price, its dividend yields 5.6%. That's well above its typical yield, which is usually around 4.5%.
Realty Income is experiencing cyclical headwinds, but it's managing well and has a comfortable cash position to keep growing. It's a great time to buy shares and benefit from a high dividend yield.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income and Walmart. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.
