If You'd Invested $3,733 in Realty Income Stock 10 Years Ago, Here's How Much You'd Have Today

The Motley Fool · 11/26 09:15

Realty Income (NYSE: O) is a wealth-creating machine. The real estate investment trust (REIT) dishes out a growing stream of dividend income. On top of that, its stock has steadily grown in value. These two value drivers have added up to a very attractive total return over the past decade.

Here's a look at how much money an investor would have today if they spent $3,733 to buy 100 shares about 10 years ago.

Realty Income pays a steadily rising monthly dividend. The REIT has raised its dividend payment 127 times since its initial public market listing in 1994, including the past 108 quarters in a row. Because of that, investors have collected a growing stream of dividend income over the past decade.

An investor who purchased 100 shares 10 years ago would have initially received about $219 in dividend income during the first year based on its payment at the time. That's a nearly 5.9% dividend yield on an initial investment. That income stream would have steadily grown, reaching its current annualized level of $308. That's a 40% increase from the initial annual level. They would have collected a cumulative $3,077 in dividends during that decade. Meanwhile, the initial investment now yields 8.2%.

That income is only part of the return. Shares of Realty Income have steadily appreciated as the REIT invested in expanding its portfolio of income-producing properties, which has increased its funds from operations (FFO) per share by around 5% per year. That has helped grow the REIT's share price by over 50%. As a result, the initial investment is now worth about $5,742. That's in addition to getting more than 80% of the initial investment back in dividend income. Add it up, and the 100-share purchase would have grown from $3,733 to $8,819 in total value. That investment is also throwing off about $310 (and growing) of annual dividend income.

Realty Income is a slow and steady wealth creator that generates a growing stream of dividend income from an increasingly more valuable investment.

Matt DiLallo has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.