Market value: $20.9 billionDividend yield: 4.9%
Realty Income (O, $57.83) is a reliable net lease retail REIT that owns nearly 6,600 retail properties leased to approximately 600 tenants across 51 industries. Its top tenants – including Walgreens (WBA), 7-Eleven, Dollar General (DG), FedEx (FDX) and Dollar Tree (DLTR) – are recession-resistant businesses. Consider that despite COVID and the recession, Realty Income grew adjusted FFO by 4% over the first nine months of 2020.
The real estate firm also managed to hike its payout in each of those three quarters, while closing $1.3 billion of acquisitions and maintaining a conservative balance sheet, no less.
Portfolio occupancy improved to 98.6% in the September quarter and has never dropped below 96%. The REIT’s contracted rent collections increased to 93.6% in November and are on-track to improve further in 2021 if the economy rebounds.
Realty Income is as dependable as they come. It has produced positive EPS growth in 23 of the past 24 years. Since going public in 1994, the REIT’s median annual EPS growth has exceeded 5%, and annual total shareholder returns have ranged around 15%. Some of those returns have come via its monthly dividend, which has been improved upon for 93 consecutive quarters.
And if you hate market volatility, you should enjoy O shares, which have a beta of 0.4, implying that the stock is 60% less volatile than the overall stock market.
BofA Securities analysts list Realty Income as their REIT representative among their 11 best stocks for 2021, lauding its “high quality, non-discretionary tenants.”
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