This 5% dividend yielding stock just made investors even more money. Here’s how.

Real estate income (A 0.97%) it was a money making investment over the years. The real estate investment trust (REIT) paid dividends like clockwork. It recently paid its 650th consecutive monthly dividend.

The REIT routinely increases its dividend payout. Most recently, it posted its 126th dividend increase since going public in 1994, pushing its dividend yield more than 5%. This was the fourth dividend increase this year. It has now has given investors growth for 107 consecutive quarters and 30 consecutive years, growing its payout at an annual rate of 4.3% during that time, including more than 3% in the past year.

Here’s how is capable continues to pay its investors even more money.

Built to produce steady income

Realty Income focuses on owning a portfolio of income-producing commercial real estate properties. The company owns a diversified portfolio of 15,450 retail, industrial, gaming and others. properties throughout USA and Europe. It primarily owns properties leased to tenants in industries resilient to economic downturns and insulated from the pressures of e-commerce, such as grocery, convenience, dollar and drug stores.

REIT signs for the long term net leasing for these properties with high quality tenants. This lease structure requires tenants to cover building insurance, property taxes and routine maintenance expenses. Leases usually include some form of annual rental rate escalation clause. They supply the REIT very stable income that tends to grow by about 1% annually when bad debt expense is factored in.

Real estate income usually pays outside a conservative percentage of its dividend income, less than 75% of adjusted funds from operations (FFO). This gives it a nice cushion while allowing it to keep a significant percentage of its cash flow to fund new investments.

He also has an elite record. It is one of eight REITs in the S&P 500 with two credit ratings of A3/A- or better. Real estate income is also very low leverage ratiosgiving him even more financial flexibility.

Multiple engines of growth

Income from real estate financially strong the profile allows it TO constantly expand its portfolio. The company’s retained cash flow after paying dividends on its own can help fund enough new investment to grow its adjusted FFO by about another 1% per year, after accounting for the impact of maturing debt refinancing in the current higher interest rate environment. Add in rent growth, and the REIT can internally deliver around 2% annual growth.

Meanwhile, Realty Income’s elite balance sheet gives it plenty of financial flexibility to externally finance increased purchases. The REIT estimates that for every $1 billion of additional real estate investment do whatmay add 0.5% to annual adjusted FFO. Externally funded acquisitions are conservatively expected to add another 2% to 3% to adjusted FFO each year. added its internal growth factors, and Real Estate Income should grow its adjusted FFO per share by 4% to 5% annually. Consider the high yield dividend and its total return should be around 10% annually.

The REIT should have I’m not missing of investment opportunities. The total global net addressable rental real estate market is estimated to be $14 trillion. That gives it a long runway for growth. Meanwhile, it has steadily expanded its opportunity set by adding new property verticals. In recent years, it has added data centers, gaming properties and new European markets to its portfolio. It also launched a credit investment platform. These new platforms have opened the doors to additional growth opportunities.

Realty Income should continue to make investors more money

Realty Income has built a real estate empire that makes money. The company’s sustainable and growing portfolio prints cash, which it distributes to investors through a steadily growing dividend. With a solid financial profile and a long growth track beforethis REIT should continue to make money for its investors for years to come.