How a $25,000 Realty Income Investment Could Compound Into Real Retirement Income
Yahoo Finance ·
Realty Income ( O +1.35% ) has been a compounding machine. The real estate investment trust (REIT) has delivered a 13.6% compound annual total return since its 1994 public market listing . A big driver has been its growing dividend. The REIT has raised its payment 135 times, growing it by a 4.1% compound annual growth rate. The REIT pays a monthly dividend currently yielding 5%. With more dividend growth likely, a $25,000 investment could compound into real retirement income. Realty Income offers investors a high current income yield that should grow over time. At its current yield, a $25,000 investment would generate about $1,237.50 in annual dividend income. That income stream should steadily grow over the years, given the REIT's history and its stated mission of investing to "deliver dependable monthly dividends that increase over time." Here's a look at how much dividend income the REIT could deliver if it continues to grow its dividend at around its historical rate of 4.1%: That chart lays out two scenarios. Under one assumption, the investor doesn't reinvest their dividends. This scenario would see the $25,000 investment generating nearly $4,000 in annual dividend income from growth alone within 30 years, boosting the yield on cost to nearly 16%. Under the second scenario, the investor reinvests their dividends at the current yield (around 5%). This would compound their income exponentially by year 30, when they'd be collecting over $58,000 in dividends each year.
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