The Monthly Dividend Company Is a Slam-Dunk REIT
During the second quarter the company announced revenue increased by 63% to $184.3 million as compared to $113.1 million for the second quarter of 2012. In addition, revenue, for the six months ended June 30 increased 58.1% to $355.5 million as compared to $224.9 million for the same period in 2012.
Net income available to common stockholders for the second quarter was $44.2 million as compared to $33.0 million for the period a year ago, while Funds from Operations (or FFO) for the second quarter increased 81.7% to $118.5 million as compared to $65.2 million for the 2012 period. FFO per share increased 22.4% to 60 cents for the second quarter compared to 49 cents for the year-ago period. The company's occupancy increased by 50 basis points to 98.2%, closing in on the all time high of 98.8% reached in the first quarter of 2007.
The company stated on the earnings call last week that it had sourced over $15 billion of properties. After vetting out the opportunities the company closed on 190 properties totaling $738.1 million at a 6.8% cap rate. The company's CEO, Tom Lewis, mentioned during the earnings call that the company had seen "record transaction flow" and it was deemed the "most inquisitive quarter" in its history. As a result of the rapid acquisition growth, the company increased guidance from $1.0 billion to $1.25 billion.
As of the latest quarter, Realty Income owns 3,681 properties located in 49 states and Puerto Rico, leased to 194 commercial enterprises doing business in 46 industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 11 years.
Realty Income has paid and increased annual dividends for 19 years in a row and the Triple Net REIT is one of the few REITs that has maintained that consist record of repeatability. In June Realty Income announced the 63rd consecutive quarterly dividend increase (the third increase this year), which is the 72nd increase in the amount of the dividend since the company's listing on the New York Stock Exchange in 1994. The annualized dividend amount as of June 30 was approximately $2.179 per share. The amount of the monthly dividends paid increased 24.5% to $0.544 per share, in the second quarter of 2013 from $0.437 per share for the same period in 2012.
Realty Income shares closed Wednesday at $43.41 and the current dividend yield is 4.98%. The Price to Funds from Operations (P/FFO) is 18.3x, a fair valuation based upon the company's "blue-chip" track record (and recent results). As the largest Triple Net REIT ($13.2 billion total cap), Realty Income is a highly regarded "sleep well at night" stock and that's why I have included shares in my SWAN portfolio (see my newsletter here).