Realty Income Corp. (NYSE:O)

Rates rise they are at peak and profits will bleed, albeit they are HUGE!

Has had a nice run, and now it's looking expensive. That dividend is higher than the annual FFO now.

i like monthly re investing dividends plus solid growth

can 30 stocks randomly picked from a bag of scrabble tiles beat the market? there's only one way to find out.

High volume with little price movement after 13 consecutive up days resulting in a big run up. Im looking for it to settle to about the $40 area (which might be a great place to pick up a few shares). However if it breaks below $38 (approximately) it will have a long ride down before it hit support again.

Monthly dividends can't be beat and the value of this REIT is always on the upswing!

On 8-18-12 rcbar picked O

Realty Income has shown a good one year rate of return. It pays monthly dividends. The combination of dividends and capital gains should provide a outperform return

Very low growth in earnings, high valuation with a P/E around 40, and extremely slow dividend growth (combined with an already stretched payout ratio) all bodes very ill for this stock when interest rates actually begin to climb again. This stock price is artificially propped up by income investors needing some place to park their assets.

Its golden! Long history of growth stability and good management.

Dividends... 5.1% payout

2 stars??????? lol

Stable dividend creation machine, plus the expectation that real estate will inevitably rise again.

Great dividend oppurtunity here.

dividend play all the way. 400 some dividend increases speaks volumes

building up the retirement portfolio, this is a must, longing

All you need to know about O is that it has raised its dividend every quarter for 17 years.... oh, and it pays monthly. I have one word for you, compounding.

Here's a discussion I had with another poster on another board. It changed my mind about O.

"Bonkthegrups, look at it another way.
Has O's valuation relative to income changed significantly over the past several years?
If not, wouldn't it be fair to say that the market has determined that O has been fairly valued over that time frame?
And wouldn't it then be fair to say it is fairly valued now?"

Ahhh, someone willing to actually discuss things on a discussion board. Thank you.

Your question is a good one. There are a couple of ways of answering - on an absolute basis, and a relative basis.

First on an absolute basis, where has O traded as a multiple of AFFO (i.e. what it can pay out).

For simplicity let's look back at the last several years and the stock price at year end:

FFO per share:

1999: 1.23
2000: 1.26
2001: 1.33
2002: 1.38
2003: 1.46
2004: 1.50
2005: 1.62
2006: 1.73
2007: 1.89
2008: 1.83
2009: 1.84
2010: 1.83

Now lets's look at the share price and multiple at each year end:

1999: 10.31
2000: 12.43
2001: 14.70
2002: 17.50
2003: 20.00
2004: 25.29
2005: 21.62
2006: 27.70
2007: 27.02
2008: 23.15
2009: 25.91 (traded at 15 in Mar/09)
2010: 34.20

Now the multiples:

1999: 8.4x
2000: 9.9x
2001: 11.0x
2002: 12.7x
2003: 13.7x
2004: 16.9x
2005: 13.4x
2006: 16.0x
2007: 14.3x
2008: 12.7x
2009: 14.1x
2010: 18.7x

Please do your own math as these are my quick calcs.

But on the surface you can see that:

a) the multiple is at an all-time extreme high

b) FFO per share consistently grew in years past but for past 4 years has been flat to downish (hard to grow cash flow on a per share basis when you pay all of it out)

Now, one of the key drivers here is interest rates that are at extreme lows - forcing investors to bid up assets that yield something - the question I have is what happens to "O" if and when rates normalize.

If say the 10-year government bond goes back up to the 5% range (from the 3.4% current range) where it was in 2007 - say the multiple goes to the 14x range (where it was at the end of 2007) - that would be a share price of $25.60.

Back in 2000 the 10 year rate was in the 6-6.75% range and O traded at around 10x which would be a $18.30 share price (roughly half of what it is today).

This is why I'm saying an O bet needs to be looked at in conjuction with one's views of the economy and interest rates.

div