Realty Income (O)

The company is a dividend achiever as well as a component of the S&P 1500 index. It has been increasing its dividends for the past 14 consecutive years. From 1998 up until June 30 2008 this dividend growth stock has delivered an annual average total return of 14.90 % to its shareholders.

At the same time company has managed to deliver a 5.50% average annual increase in its FFO since 1998. FFO is a common measurement for a REIT. It is an alternative non-GAAP measure that is considered to be a good indicator of a company’s ability to pay dividends.

Annual dividend payments have increased over the past 10 years by an average of 5.1% annually, which is slightly lower than the growth in FFO. A 5% growth in dividends translates into the dividend payment doubling almost every 14 years. If we look at historical data, going as far back as 1994, O will have managed to double its 1994 monthly dividend payment of $0.0775/share by 2009.

Realty Income is one of the few companies which make monthly dividend payments to shareholders. The company is so proud of its ability to raise dividends several times per year, that it calls itself the Monthly Dividend Company.

Simple reason.. They have survived a 45% drop in the market. I bought this stock in Jan 2008 at 22.50 and it's Jan 2009 and it bounces in that range still. While every other stock everybody else owned from last Jan 2008 is off 25-40%, Realty Income is where it was a year ago. The reason why? They own all their properties in CASH (and properties from business that are near recession proof). Their income is Net-Lease (10-15 year agreements), that is clean cash. They have no debt, sitting on cash with a hugh untapped line of credit. Every other business is hitting the crapper because they do not have the predictable cash flow, the clean balance sheet, and the available credit. They lease out to gas stations and taco bells. Not to designer brand retailers, shopping malls or un-necessary business's. They lease to individual owners with decade leases to who have a business that works in strong markets and bad ones too. There is no other REIT that have their business model, balance sheet, and stability.

11/03/09 By Shane T. Lewis New Orleans, LA

 Recently, the hedge fund manager ackman, explained in an arctical, about a pairs trade, in which, he is short O. He has now convincned many retail investors that the dividend, is not safe. But, anyone who can spend about 3 or 4 hours researching O, will see that they have, throughout their history, primarily dealt with below investment grade tenents, and, have dealt with many bankrupcies of their tenents (Buffet's for example), all the while never cutting the dividend. In fact, they have raised it every year since they went public. Nothing has changed. O has plenty of cash on hand as well, to make targeted aquisitions when prices on R.E. stop falling, 2 or 3 years after vwhich they will look like heros. O is doing what it has always done, being "the monthly dividend co.", always loyal to their retail shareholders.

P.S. When the squeze comes, many people will get an expensive lesson on why you should not go short a stock on a tip from a hedge fund manager. In fact, I think Ackman may be long O, and manipulating the stock.

I own shares of "o".