3 High Yield Dividend Aristocrats For Income Now

2. Realty Income Corporation (NYSE:O)

Realty Income Corporation (NYSE:O) is a triple-net lease REIT that primarily invests in retail properties. But unlike mall REITs, the retail space Realty Income invests in is very resilient. Dollar stores, pharmacies, groceries, post offices, and similar businesses belong to its tenants. Those are needed even during a recession, and the threat from online competitors is pretty small  — which differentiates Realty Income’s tenants from brick-and-mortar retailers that sell apparel or books.

This is why Realty Income has not come under significant pressure during past crises. In fact, its funds from operations-per-share continued to climb even during 2020 and 2021, as the pandemic and related lockdowns did not bring down Realty Income’s earnings generation potential. Demand for its retail space remains very strong, as occupancy rates have hit a 10-year high in summer 2022.

This resilience has allowed Realty Income to increase its dividend for 26 years in a row, making it one of just a few REITs that have achieved Dividend Aristocrat status. At current prices, Realty Income’s dividend yield stands at 5%, which is above average both relative to the broad market’s yield and relative to where Realty Income’s yield stood in the past.

The company has grown its dividend and its FFO-per-share at a mid-single-digit pace in recent years, which makes it likely that investors will see similar dividend growth in the foreseeable future. Total returns in the 10% range, therefore, look achievable, especially since Realty Income is currently trading at a below-average valuation of 15x FFO and could thus benefit from multiple expansion tailwinds in the coming years.