This Elite High-Yield Dividend Stock Is Making Smart Moves to Cash In on High Interest Rates
Realty Income (NYSE: O) has an exceptional track record of increasing its dividend. The real estate investment trust (REIT) has raised its payment for 107 straight quarters (and 126 overall) since coming public in 1994. It has grown its monthly dividend at a solid 4.3% compound annual rate during that period.
One factor driving the REIT's steady dividend growth is its ability to continue expanding its portfolio. While higher interest rates have made it harder to find accretive equity investments, Realty Income has capitalized on the situation by starting to invest in real estate credit. That move could pay big dividends in the future.
Realty Income made $805.8 million in new investments during the second quarter. The biggest one was a $377.5 million senior secured note issued by the parent company of U.K. grocer Asda. That credit investment has an 8.1% yield across its six-year term. That's a higher yield than the company will earn on real estate equity investments (7.9% average on acquisitions and 7.3% on development projects). The REIT capitalized on higher interest rates to lock in a high cash yield on a very stable credit investment.
Source Fool.com
