If You Want Monthly Income, This Dividend Stock Is for You
Realty Income's dividend yield over the past decade has been around 4.5%.
The total returns of the real estate investment trust (REIT) since its inception are around four times that of the S&P 500 over that span.
Dividends paid out from REITs are taxed as ordinary income and don't get the preferential treatment that qualified dividends do.
10 stocks we like better than Realty Income ›
The beauty of investing is that you don't always need stock prices to rise to make money. Of course, it's great when they do, but dividends are a way for companies to reward investors for simply holding their stock. You can't predict how stock prices will move, but you can count on your dividends if you're investing in high-quality stocks.
Most dividend stocks pay quarterly dividends, but some do it monthly. This could be beneficial for people who need extra monthly income for bills, want to reinvest dividends more often, or prefer a more frequent cash flow.
If you're looking for monthly dividend income, look no further than Realty Income (NYSE: O).
Realty Income is a real estate investment trust (REIT) that specializes in single-unit freestanding commercial properties, including grocery stores, convenience stores, dollar stores, drugstores, and more. Its top three clients are 7-Eleven, Dollar General, and Walgreens.
Realty Income buys properties, charges rent to tenants (which also cover expenses like property taxes and maintenance), and pays its shareholders from the rental income. In the first quarter, it earned close to $250 million in net income that was available to its shareholders.
Unlike traditional stocks or exchange-traded funds (ETFs), REITs are required to distribute 90% of their taxable income to shareholders. That's why they're known for their high dividend yields and are a top choice for income-seeking investors.
Realty Income is one of the more established REITs, having been listed on the New York Stock Exchange since 1994. It's now the seventh-largest REIT in the world, with around $59 billion in real estate as of March 31.
Since 1992, its properties have consistently maintained an occupancy rate above 96%, ensuring that investors receive steady and reliable income. Higher occupancy means more rent, which means higher payouts for investors.
A stock that pays an attractive dividend is a good thing, but it only truly matters if it can sustain it. With Realty Income, you don't have to worry about that. The company has declared a monthly dividend for 659 consecutive months, including increasing the payout for the past 110 quarters.
The monthly dividend is $0.2685 with a yield of around 5.6% as of June 9, which is a bit higher than its average for the past decade.
Yields fluctuate in the opposite direction to stock prices, so they will inevitably change. However, if we assume it remains at 5.6% for the sake of illustration, every $10,000 invested could pay $560 annually, or around $46 monthly.
The above payout isn't enough to begin Lamborghini shopping, but Realty Income can be a solid income source after consistently buying shares through the years.
It's also worth noting that dividend payouts from REITs are taxed like regular income and don't receive the preferential rate that qualified dividends from traditional stocks or ETFs receive.
Since Realty Income hit the market in 1994, its stock price has outperformed the S&P 500 by around 1,250% to 1,180%. However, when you take dividends into account, its gains have far exceeded the S&P 500's returns by roughly 8,490% to 2,170%.
For perspective, here's how much a $10,000 investment in each during that time would be worth now, assuming you reinvested dividends:
Past results don't guarantee future performance, so I wouldn't invest in Realty Income expecting the same over the next 30 years. But maintaining an annual average growth rate above 12% since 1994 is impressive and shows just how lucrative an investment it can be.
Before you buy stock in Realty Income, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Realty Income wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,871!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $875,479!*
Now, it's worth noting Stock Advisor's total average return is 998% — a market-crushing outperformance compared to 174% for the S&P 500. Don't miss out on the latest top 10 list, available when you join .
See the 10 stocks »
*Stock Advisor returns as of June 9, 2025
Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
If You Want Monthly Income, This Dividend Stock Is for You was originally published by The Motley Fool
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