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Summarized by durumis AI
- Realty Income has continued to increase revenue and dividends even amidst the COVID-19 crisis, showing a stable performance in debt management.
- Having secured a new foundation for growth through M&A, Realty Income needs to be watched for its future global expansion performance.
- Realty Income is famous as a dividend growth stock and has recorded an average annual stock price increase of 15.5% since 1994.
Hello, this is Ogemmanjok of Ogem, Stock Information.
Today, we will continue with the analysis of Realty Income.
Company Analysis
Sales Analysis
Source: Realty Income 2021 Q4 Report
Retail activities were limited in 2020 and 2021 due to COVID-19.
However, Realty Income's sales increased by 26% from $1,647 million in 2020 to $2,080 million.
It achieved sales growth.
Net income for the period decreased by about 10% from $395 million to $359 million.
However, a closer look reveals that the 2021 figures include $167 million in merger and acquisition costs.
2021 appears to have been a short-term reflection of investment activities.
Although it will be necessary to check the performance table later, the effects of the merger and acquisition are expected to improve sales growth.
Debt Analysis
Debt management ability is very important for REIT stocks that operate real estate, not just Realty Income.
This is because they pay out more than 90% in dividends, so they have little cash on hand, and interest expenses from debt are a major burden.
In this regard, it will be necessary to carefully examine Realty Income's debt management capabilities.
Source: Realty Income 2021 Q4 Report
Realty Income's current debt is $15,258 million.
However, more than 80% of its debt is managed in bonds, and the average interest rate on bonds is 3.27%, which is stable.
Also, the average maturity date of debt is 6.4 years, so it seems unlikely that they will experience liquidity problems in the short term.
Furthermore, 89.8% of its debt is in fixed-rate loans, demonstrating its stable asset management.
Current Stock Analysis
PER
49.45
PBR
1.57
Competitor PER
68.02 (PLD)
Competitor PBR
3.31 (PLD)
Realty Income's PER, which represents the price-to-earnings ratio, is 49.45 times.
The PBR, which represents the price-to-book ratio, is 1.57, and since the results after the merger have not yet been reported,
it may be necessary to check again later.
King of Dividend Growth Stocks, Realty Income
Current value of investing $100 in Realty Income, Source: Realty Income website
Category
2019
2020
2021
Dividend Ratio
3.7
4.5
4.1
Dividend
2.730
2.814
2.958
Monthly Dividend
0.2275
0.2345
0.2465
Realty Income has had an annual average stock price increase of 15.5% since 1994.
And it has increased its dividends for 27 consecutive years, with an average dividend increase rate of 4.4%.
It can be called the king of dividend growth stocks.
However, REIT stocks are less volatile than ordinary stocks, and it takes longer to recover after a drop.
Also, past performance does not guarantee future performance.
Furthermore, when interest rate hikes are anticipated, as they are now, the profitability of REIT stocks may weaken.
In fact, after the subprime mortgage crisis, REIT stock returns plummeted.
REIT stocks depend on how well they manage their debt.
Realty Income has been managing its assets with a profit of about 4% of the interest rate spread sheet so far.
However, interest rate hikes due to inflation are expected after the COVID-19 crisis,
so it will be necessary to keep a close eye on its crisis response capabilities during this period.
2021 was a special year for Realty Income.
It was a year when it created a new platform for growth through mergers and acquisitions. Asset purchases have not stopped.
However, to maintain higher growth, it will be necessary to see how it achieves global expansion results.
Even so, Realty Income is a sufficiently attractive stock.
Despite the COVID-19 pandemic, the company has paid monthly dividends for 619 consecutive times since its inception,
and has increased dividends 114 times.
That's probably because it's confident in its real estate operations.
So far, we have looked at Realty Income, the representative stock of dividend growth stocks.
One-line Review
A stock that gives you the feeling of getting pocket money every month.
This material is for reference only, as I have analyzed Realty Income's company information and analysis based on my own subjective opinion.
Investors are responsible for actual stock purchases.
