Realty Income is a favorite among income-seeking investors. Here's how to figure out what you'll need to invest.
Realty Income (O -0.48%) is one of the most popular real estate investment trusts, or REITs, and for good reason. Not only is it one of the largest, but it is also built to produce steady dividend income over time. It has declared 647 consecutive monthly dividends, and has never paused or reduced its dividend since listing on the New York Stock Exchange in 1994.
Because of this, it is a favorite among income-seeking investors. If you're looking for a specific amount of income -- say $1,000 -- here's how to figure out how much Realty Income stock you'll need to buy to get it.
How much do you need to invest for $1,000 in dividend income?
I'll answer the question but will do even better and give you a quick method to use to calculate this for any stock you want. The general formula to figure out how much you'll need to invest to achieve a certain level of dividend income is to divide the desired amount of income by the stock's dividend yield (expressed as a decimal).
In Realty Income's case, the dividend yield as of this writing is 5.93%, which as a decimal would be 0.0593. Dividing $1,000 in dividend income by this number gives a total investment of $16,863.
Of course, you can use this formula to figure out how much you'd need to invest in any stock or exchange-traded fund (ETF) in order to achieve a certain amount of dividend income on an annualized basis.
As a final thought, $16,863 is the amount you'd need to invest in Realty Income to get $1,000 in dividend income today. Realty Income has increased its dividend for 107 consecutive quarters, so it's likely that your $1,000 income stream will rise significantly over time.
Matt Frankel has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
