Can Realty Income Corp (O) Rise Above Its 52-Week High?

Shares of real estate investment trust Realty Income Corp (NYSE:O) reached a 52-week high on Tuesday.Let’s take a look at how it got here to find out if the company’s stock price can advance even higher.

How it got here
Good results never hurt, and Realty Income’s have been positively beneficial. The company’s most recent quarter showed some encouraging numbers, including a top line that climbed by 16% (to $130 million) and adjusted funds from operations — a key metric for REITs which is, essentially, net profit with depreciation, amortization and lesser line items added back in — advancing a respectable 6%.

The rosiness spread to the firm’s increased guidance for fiscal 2013, which now anticipates an adjusted FFO of $2.33-$2.39 per share. This means an improvement of anywhere from 13% to 16% over 2012’s $2.06.

Meanwhile, occupancy is a very impressive 97%.That’s saying something, since following a recent merger (more on this in a second), the company operates over 3,250 properties. Its tenant roster is well diversified, with plenty of famous names but none that hogs too much of the real estate. FedEx Corporation (NYSE:FDX) is post-merger Realty Income’s top renter, but the storied logistics company was responsible for only 5.5% of its landlord’s total portfolio rental revenue. The rest of the list is populated by businesses as diverse as L.A. Fitness, AMC Theaters, CVS Caremark Corporation (NYSE:CVS), and BJ’s Wholesale Club.

Now, about that merger. Realty Income has taken advantage of the good conditions to make a strong addition to its portfolio: American Realty Capital Trust, a smaller REIT the company acquired last year and absorbed into its mother ship last month. ARCT was the reason its new parent raised its AFFO projection; it anticipates the new unit will add $0.20-$0.22 per share to this metric.

That also provides more fuel for a dividend boost, a key reason — heck, sometimes the only reason — investors buy shares of REITs (which by law must distribute at least 90% of their net profit this way). Realty Income pays dividends all the time; in fact it trumpets this by the trademarked self-description “The Monthly Dividend Company,” just in case there’s any doubt.

That very regular handout has been distributed 512 months in a row, and it’s increasing. The firm commemorated the new year by lifting it by 19% to slightly over $0.1809 per share. That 19% was a much bigger hike than the company’s usual incremental boosts.Particularly in the REIT world, investors sit up and take notice when a disbursement is raised by that sort of percentage.