Latest news with #RealtyIncomeCorp
Yahoo
a day ago
- Business
- Yahoo
How Realty Income Investors Are Benefiting From One Of Real Estate's Most Overlooked Tax Advantages
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Realty Income Corp (NYSE:O) has become something of a gold standard for investors who are chasing monthly income. It's one of the few publicly traded companies with the guts, and the track record, to trademark its nickname: The Monthly Dividend Company®. With more than 15,600 commercial properties and over 660 consecutive monthly dividend payments under its belt, Realty Income is a REIT investors turn to when they want predictable income, even in unpredictable markets. But there's another perk Realty Income offers its shareholders that doesn't show up in the yield column, and many investors don't even realize they're benefiting from it. It's called depreciation, and as most real estate investors know, it can be one of the most powerful tax advantages available. In 2024, Realty Income paid out $3.126 per share in dividends, more than 126% of its estimated taxable income. That may sound like a red flag at first, but it's actually a feature of REIT taxation, not a flaw. REITs are required to distribute at least 90% of their taxable income to shareholders in exchange for avoiding corporate income tax. But "taxable income" and "cash flow" are two very different things. Thanks to depreciation, a non-cash expense that reduces taxable income without reducing actual earnings, REITs like Realty Income can pay out more in dividends than they report in taxable income. When that happens, the portion of dividends that are greater than the taxable income are treated differently. Here's how that played out for shareholders last year: $2.17598 per share was classified as ordinary income $0.94952 per share was classified as a nontaxable distribution That nontaxable portion isn't free money. It reduces the investor's cost basis in the stock, which can lead to higher capital gains taxes if and when the shares are sold. But for long-term holders, that trade-off can be more favorable than paying ordinary income tax every year on the full dividend amount. In short: depreciation lets investors defer taxes today and potentially pay a lower rate later. Most investors are drawn to Realty Income for its reliable dividend and consistent growth. Earlier this month, the company announced its 131st dividend increase since being listed on the NYSE, bumping the monthly payout from $0.2685 to $0.2690 per share. That may not sound like much, but when you compound reliable growth over decades, it adds up. Despite ongoing challenges in the real estate market, analysts still see upside for the stock. Recent price targets from UBS, Scotiabank, and Wedbush suggest an average price target of $60.33, compared to the current price near $57.75. And that's on top of a 5.61% yield. Realty Income isn't just a favorite among retail investors, it's also a sizable holding for several large institutional investors, like Vanguard Group Inc, BlackRock Inc. and State Street Corporation, which collectively hold nearly 300 million shares valued at over $17 billion. But this isn't the only real estate play that's been gaining the attention of major Wall Street firms. In 2024, there were more than $1.1 billion in securitizations for an asset class that has been flying under the radar until recently, and that number is expected to more than double this year. This emerging asset class lets investors capture the upside of rising home values with a built-in cushion if prices fall. While Realty Income is built on commercial tenants like Walgreens, 7-Eleven, and FedEx, there's a parallel real estate market that may be even more compelling: owner-occupied home equity. Americans have more than $34 trillion in equity tied up in their homes, a number that has more than tripled since 2013. And some of the biggest names on Wall Street have figured out how to tap into this growth. The strategy involves something called Home Equity Agreements (HEAs), and if you've never heard of this before it's because individual investors have been excluded from participating in this growing market. Until now anyway... One of the first companies to begin operating in the home equity market recently launched a new fund available to individual accredited investors – U.S. Home Equity Fund I. The fund is targeting a 14%-17% net IRR to investors with a strategy that can provide positive returns even in a market Shutterstock This article How Realty Income Investors Are Benefiting From One Of Real Estate's Most Overlooked Tax Advantages originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
06-05-2025
- Business
- Yahoo
Realty Income Corp (O) Q1 2025 Earnings Call Highlights: Strong European Investments and Steady ...
AFFO per Share: $1.06, representing a year-over-year growth of 2.9%. Total Operational Returns: 8.9% for the quarter. Investment Volume: $1.4 billion at a 7.5% weighted average initial cash yield. US Investments: $479 million at an 8.3% weighted average initial cash yield. European Investments: $893 million at a 7% average initial cash yield. Portfolio Occupancy: 98.5%, approximately 20 basis points below the prior quarter. Rent Recapture Rate: 103.9% across 194 leases. Properties Sold: 55 properties for total net proceeds of $93 million. Net Debt to Annualized Pro Forma Adjusted EBITDA: 5.4x. Fixed Charge Coverage Ratio: 4.7x. Variable Rate Debt Exposure: Just over 6% of outstanding debt principal. 2025 AFFO per Share Outlook: $4.22 to $4.28. 2025 Investment Deployment Target: Approximately $4 billion. Warning! GuruFocus has detected 7 Warning Signs with O. Release Date: May 05, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Realty Income Corp (NYSE:O) reported a year-over-year growth of 2.9% in AFFO per share, reaching $1.06. The company achieved a total operational return of 8.9% for the quarter, supported by a 6% dividend yield. Realty Income Corp (NYSE:O) invested $1.4 billion at a 7.5% weighted average initial cash yield, with significant investments in Europe. The company maintained a high portfolio occupancy rate of 98.5%, slightly above the historical median. Realty Income Corp (NYSE:O) successfully closed a $600 million 10-year unsecured bond offering and expanded its multicurrency unsecured credit facility to $5.38 billion. Portfolio occupancy decreased by approximately 20 basis points from the prior quarter. The company anticipates a potential rent loss of 75 basis points for 2025, primarily from properties acquired through prior M&A transactions. Realty Income Corp (NYSE:O) faces challenges in finding suitable risk-adjusted investment opportunities in the US compared to Europe. The company is cautious about increasing its investment guidance due to ongoing market uncertainties. Realty Income Corp (NYSE:O) experienced a slight decrease in rent recapture rate due to specific asset types, such as theaters. Q: Can you discuss the investment activity in Europe during the first quarter and how it compares to opportunities in the US? A: Sumit Roy, President and CEO, explained that 65% of the total investment volume came from Europe, focusing on retail parks in the UK and Ireland. These investments were compelling due to below-market rents and acquisition costs well below replacement costs. In contrast, while there were opportunities in the US, the credit risks associated with higher-yielding investments were not as favorable. Q: The rent recapture rate was 103.9%, but there was a slight decrease in re-leasing to the same tenants. Can you explain this? A: Sumit Roy noted that the decrease was a one-off situation, primarily due to three theater assets that affected the overall rate. However, the majority of renewals were still favorable, with a recapture rate of 99.7%. Q: You're 35% of the way to your annual investment guidance after Q1. Why is the guidance unchanged? A: Sumit Roy stated that the unchanged guidance reflects caution due to economic uncertainty. While the first quarter was strong, the company is being deliberate and focused on ensuring appropriate use of equity and maintaining discipline in capital allocation. Q: How is the U.S. Core Plus Fund progressing amid economic volatility? A: Sumit Roy expressed optimism about the fund's progress, noting that Realty Income's unique position and reputation are attracting interest from institutional investors, even in a challenging environment. The fund is seen as a strategic opportunity to broaden capital sources. Q: Can you provide more details on the retail parks in Europe and their potential? A: Sumit Roy highlighted that retail parks were acquired with below-market rents and have seen significant cap rate compression since initial investments. The strategy involves repositioning these assets with new retailers, which could lead to substantial value uplift and rent increases. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
10-04-2025
- Business
- Yahoo
5 Dividend Aristocrats with sky-high yields above 5%
There are several ways for investors to add stable investments that provide a stream of income to their portfolios. One of the most common ways to do so is by investing in dividend stocks. In fact, there are some companies, referred to as Dividend Aristocrats, that have consistently been raising their dividends every year for 25 years or more. Here's a look at five Dividend Aristocrats with yields above 5 percent. If you are considering adding any new investments to your portfolio, you may want to consult with a financial advisor who can help you devise a plan based on your individual needs, time horizon and risk tolerance. Company Dividend yield Franklin Resources Group (BEN) 6.89 percent Realty Income Corp. (O) 5.97 percent Amcor Plc (AMCR) 5.65 percent T. Rowe Price Group Inc. (TROW) 5.63 percent Stanley Black & Decker Inc. (SWK) 5.11 percent A Dividend Aristocrat is a stock with a long track record of paying investors dividends. These are typically large, resilient companies that have stable, income-generating businesses. This means they aren't necessarily the fastest-growing companies, but they typically have solid fundamentals. To qualify as a Dividend Aristocrat, a company must meet these criteria: Increase its dividend payout every year for at least 25 years; Be a member of the S&P 500; Have a market cap of at least $3 billion; And meet the liquidity requirement of $5 million in average daily trading volume. If you're looking to cash in on the high dividends these stocks pay, you have a couple of options. If you're choosing this route, you will have to put in some research to figure out which individual stocks fit into your long-term financial goals. A financial advisor can also help you pick investments that align with your overall financial plan. Probably the easiest and most accessible way to invest in Dividend Aristocrats is to buy shares of an ETF. In fact, dividend stock ETFs are very popular, and you can even buy a Dividend Aristocrats ETF specifically. One option is the S&P 500 Dividend Aristocrats ETF (NOBL). ETFs are an affordable way to diversify your portfolio because the expense ratios tend to be low. Also, these funds expose you to a basket of different stocks at one time, diversifying your holdings. Need an advisor? Need expert guidance when it comes to managing your investments or planning for retirement? can connect you to a CFP® professional to help you achieve your financial goals. For all the benefits that come with generating passive income through stocks that pay dividends, there are a few risks to keep in mind when investing in high-dividend stocks. Competitive weakness. Some companies pay high dividends while neglecting to reinvest that money into their business so that the company can grow. This can potentially weaken their market position over time and create a decline in profit. Taxes. It's important to understand that any dividends you receive are taxable as income (unless they're in a 401(k) or other tax-advantaged account). The dividends are also taxable if you reinvest them. Warning signs. Sometimes, a company's dividend yield is high because it has recently experienced a major drop in its stock price, sending the yield up. Make sure to evaluate the financial health of the company and metrics like its payout ratio, which will tell you what percent of the company's profits are paid out as dividends. If the company has a large payout ratio, that means it may have to dip back into that during times of economic distress, taking away from the dividend you'll receive. Investing in Dividend Aristocrats is just one way to generate passive income. There are a few ways to go about investing in stocks, including buying them individually or purchasing shares of an ETF that includes Dividend Aristocrats. Whichever route you choose to go, remember to take the time to consider your risk tolerance, time horizon and how Dividend Aristocrats fit into your long-term investing strategy. A financial advisor can help you navigate the answers to these questions. Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation. Sign in to access your portfolio
Yahoo
18-03-2025
- Business
- Yahoo
Jim Cramer Recommends Buying Realty Income (O) For Dividends
We recently published a list of . In this article, we are going to take a look at where Realty Income Corp (NYSE:O) stands against other stocks that Jim Cramer discusses. Jim Cramer recently talked about the market selloff and how years of profits are lost within days when panic hits the market: 'They wipe out these gains pretty easily, don't they? Just like that, the sellers take away months, if not years, of profits because they want to get ahead of a potential recession. And then they swap into the safety stocks that thrive in a slowdown. Welcome to the world of recession preparation, where it doesn't matter what prices you get on the sales or the buys as long as they get done.' Cramer said that while he agrees with the broader tariff policies of President Trump, he does not like the 'way' he's implementing them. 'I don't think that Trump will start going easier on our trading partners just because the Dow's been eviscerated. He's not sacrificing our trade policy on a cross of gold — meaning, of course, higher stock prices. Of course, not many investors saw this coming, and that's incredible to me. And the shock from Trump's change in attitude has terrified the moneymen — the big moneymen,' Cramer added. READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In For this article, we picked 10 stocks Jim Cramer discussed during his programs on CNBC. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Number of Hedge Funds Investors: 23 A caller recently asked Jim Cramer about his thoughts on Sunoco as a safe dividend stock for retirement. Cramer said he likes the stock and also recommended Realty Income Corp (NYSE:O). 'Let me throw in that I like Realty Income now. They boosted the dividend today.' Earlier in February, Realty Income Corp (NYSE:O) raised its dividend by 1.5%. It's one of the most popular monthly dividend REIT stocks in the market. Parnassus Core Equity Fund stated the following regarding Realty Income Corporation (NYSE:O) in its Q3 2024 investor letter: 'Realty Income Corporation (NYSE:O) is poised to benefit from lower interest rates. Because its commercial tenants are mostly on 10-year leases, the stock's steady dividend stream is attractive in the current environment of slow deceleration in the economy with rates coming down. In this favorable backdrop, the company also continues to execute well.' Overall, O ranks 9th on our list of stocks that Jim Cramer discusses. While we acknowledge the potential of O, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than O but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
