Top Monthly Dividend Stocks to Buy During the COVID-19 Pandemic Include Realty Income Corporation
By: Olivia Faucher,
Top monthly dividend stocks to buy during the COVID-19 pandemic include Realty Income Corporation (NYSE: O).
Realty Income Corporation, also known as a monthly dividend stock, is a company dedicated to providing shareholders with dependable monthly income. The company is structured as a real estate investment trust (REIT), therefore the monthly dividends are supported by the cash flow from their property portfolio. Realty Income owns more than 6,500 real estate properties that are under long-term lease agreements with commercial tenants.
Performance of Realty Income Corporation
The current price per share of Realty Income stock is $60.41, which is well below the 52-week high of $84.92. The stock price has been moving on a steady upward trend over the last five years, but it has certainly suffered as a result of the widespread financial implications of the COVID-19 pandemic. Realty Income Corporation’s stock took a tremendous hit in March 2020, falling from $76.59 to $42.50. Since then, the stock has been slowly recovering and still has room to improve. Investors who make the move to buy Realty Income stock right now, while the share price is depressed, will put themselves in a prime position to attain a strong dividend yield on the investment as well as the potential for capital growth as the stock continues to recover.
The company’s revenue growth year-over-year is reported at 13.50%, which greatly outperformed the sector as a whole. As the sector median stands at 2.73%, Realty Income Corporation stands among its competition.
Current Dividend Yield and Payouts of One of the Top Monthly Dividend Stocks to Buy
Realty Income Corporation has delivered nearly 601 consecutive monthly dividend payouts in its 50-year history. Realty Income Corp. is also classified as a Dividend Aristocrat, meaning the company has a record of boosting annual dividend distributions for at least the last 25 consecutive years. Thus, Realty Income Corporation has established a reputation of paying reliable dividends to its investors.
The current $0.234 monthly payout results in an annualized payout of $2.81 and a dividend yield of 4.61%. For the last two decades, the company managed to maintain an average dividend growth rate of nearly 5% per year.
Price/Earnings Ratio
The P/E ratio for Realty Income for the trailing12 months is reported at 41.38. This P/E ratio is relatively high compared to the average REIT P/E ratio of 33.4. Given the company’s high P/E ratio, it is important to reiterate that this stock is a good buy on the basis that it provides a reliable monthly dividend. It should also be kept in mind that, while a seemingly high P/E ratio can indicate that a stock is overvalued, it can also signal that it is an exciting stock with strong growth potential.
Comments from Realty Income Corporation Leadership
On August 3, 2020, Realty Income Corporation held a Q2 earnings call. The company’s CEO, Sumit Roy, reassured investors and praised the company’s handling of economic turmoil.
“I appreciate my colleagues’ seamless transition to a remote work environment, recognize our team’s outstanding dedication and contributions that continue to drive our business,” Roy said. “While economic and public health considerations remain due to the COVID-19 pandemic, our operating results for the second quarter continue to demonstrate the stability and resiliency of our business.”
Roy also previously spoke about his company’s strong financial standing in a press release on August 3, 2020, in which he said, “Our diversified and high-quality real estate portfolio, which is primarily leased to tenants providing non-discretionary and/or low price point goods or services, was 98.5% occupied at quarter-end, and we achieved a 101% rent recapture rate on re-leasing activity during the quarter. As of July 31, we had total liquidity of $2.9 billion, including approximately $400 million of cash on hand and $2.5 billion remaining borrowing capacity available on our $3.0 billion revolving credit facility, which we believe provides us significant financial flexibility.”
Why dividendinvestor.com believes Realty Income Stock is a Buy
- Given Realty Income’s longstanding history of paying monthly dividends, investors can rely on monthly income and have peace of mind that the dividend likely will not be suspended due to the current market volatility.
- Realty Income Corporation has achieved consistent revenue growth over time, signaling strong financial health.
- Positive statements from leadership at Realty Income affirm that the company is not going to be negatively affected in any substantial way as a result of the pandemic.
Key Risks for Realty Income Corporation
- Damage to properties: Property damage could happen as a result of tenant behavior, or it could be the result of a natural disaster such as a flood, hurricane, or fire.
- Tenants inability to pay rent: With widespread shutdowns due to the COVID-19 pandemic, many businesses were forced to stop operating for the time being, or at least operate differently than normal. The decreased stream of revenue during shutdowns has left many small businesses unable to pay their rent.
- Struggling to attract tenants: Given the recent shift towards online shopping, commercial properties may become vacant as brick-and-mortar stores struggle to compete with large online retailers.
Competitive Analysis
The chart below compares Realty Income Corporation (O) to two of its competitors, Welltower, Inc (WELL) and Equity Residential (EQR) , in terms of various financial metrics.
| O | WELL | EQR | |
| Current Stock Price | $60.41 | $55.5 | $52.31 |
| Market Cap | $20.84 billion | $22.97 billion | $19.47 billion |
| Beta (5Y Monthly) | 0.63 | 0.87 | 0.58 |
| P/E Ratio (TTM) | 41.38 | 17.43 | 17.36 |
| EPS (TTM) | 1.46 | 3.16 | 3.01 |
| Dividend Frequency | Monthly | Quarterly | Quarterly |
| Dividend Yield | 4.61% | 4.53% | 4.56% |
Realty Income Corporation sets itself apart from the competition with its monthly dividend. The company’s defining characteristic is that it provides dependable dividend payouts to its investors, making it a worthwhile investment for someone who is looking to add a monthly dividend to hir or her portfolio. To learn about other monthly dividend stock suggestions, read the following article: 6 Best Monthly Dividend Stocks to Buy Now.
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