Realty Income: With a 6% dividend yield, can the company increase its dividend growth?

Realty Income: With a 6% dividend yield, can the company increase its dividend growth?

In a recent article, Aktienwelt360 reported on Realty Income, a US real estate investment trust (REIT) that currently offers a dividend yield of 6%. The increased interest rates have led to cheaper prices, which leads to this attractive return. Realty Income has also paid a strong dividend to investors for over 53 years.

As a financial expert, I take a closer look at the REIT's initial position. On an adjusted basis, Realty Income currently earns $1.00 as funds from operations per share and $1.02 on a normalized basis. The payout ratio is approximately 76%, which can be considered moderate for a REIT. Therefore, slight dividend growth could be possible. However, due to the current interest rate situation, management is likely to act conservatively and may have little scope for a large increase in the dividend. The REIT's balance sheet is solid, despite having a relatively high debt level of $22 billion. It should be noted that management should ideally retain some cash to pay off debt.

The outlook for the property market remains challenging as interest rates could remain high. Realty Income should therefore continue to act cautiously. Increasing the dividend would be a promise to income investors given the company's history. With a dividend yield of over 6%, Realty Income offers an attractive entry-level yield.

My conclusion is that it is possible that Realty Income will continue to increase the dividend, but probably by a moderate amount. The company's balance sheet is solid and the payout ratio is moderate. However, I do not expect a large increase in the dividend in the short term.

Source: According to a report by www.aktienwelt360.de.