Realty Income Corp: Anticipating the Next Dividend Run
This morning, a “Potential Dividend Run Alert” was issued for Realty Income Corp (NYSE: O) through our Dividend Alerts service. Let’s explore this topic further.
Understanding the Dividend Run Concept
First, what exactly is a “Dividend Run”? This concept was introduced to us during a past ValueForum conference. To clarify, we need to start with the behavior of a Stock on its ex-dividend date.
What Is an Ex-Dividend Date?
The ex-dividend date is the trading day when new buyers are no longer entitled to the forthcoming dividend. To receive the dividend, investors must purchase shares before this date. Typically, the Stock price is expected to drop by the dividend amount on the ex-date. If it didn’t drop by that amount, buyers would end up paying more for the same shares.
The Dividend Run Phenomenon
Given that a stock drops by the dividend amount on its ex-date, shouldn’t it rise in anticipation of a dividend? If a dividend-paying Stock only fell on ex-dates, its price would eventually reach zero, which doesn’t align with companies that continuously earn profits and pay dividends. Thus, there exists a “pressure” for the Stock to rise leading up to a dividend, creating a potential Dividend Run.
The term “sometime” indicates varying perspectives among dividend investors about when to capture these Dividend Run effects. Some investors prefer to buy and sell on specific dates, while others engage in dollar-cost averaging. A common strategy is to buy shortly before the ex-div date, hold for the dividend, and then sell afterward. Another approach involves selling the day before the ex-div date to maximize capital gains, often seen about two weeks prior to the targeted sale date.
Historical Context: Realty Income’s Dividends
For example, consider the dividend of $0.269 per share that went ex-dividend on 05/01/25. The last trading day before this date saw shares close at $57.86. A look at the price two weeks prior on 04/15/25 shows a closure at $57.01. Thus, during the two-week period leading to the dividend, shares of O increased by $0.85.
Looking back over the last four dividends, this strategy would have generated capital gains exceeding the dividend amount three out of four times, totaling a “Divvy Run” of +$4.05. For comparison, the total dividends from these quarters were just $1.07. Here’s the summary:
| Ex-Dividend | ——Price 2 Weeks Prior—» | ——Price 1 Day Prior—» | Run Gain/Loss | |||
|---|---|---|---|---|---|---|
| 05/01/25 | 0.269 | 04/15/25 | 57.01 | 04/30/25 | 57.86 | +0.85 |
| 04/01/25 | 0.269 | 03/17/25 | 56.98 | 03/31/25 | 58.01 | +1.03 |
| 03/03/25 | 0.268 | 02/13/25 | 54.92 | 02/28/25 | 57.03 | +2.11 |
| 02/03/25 | 0.264 | 01/16/25 | 54.58 | 01/31/25 | 54.64 | +0.06 |
| Div Total: | 1.07 | “Divvy Run” Total: | +4.05 | |||
Looking Ahead
In approximately two weeks, Realty Income Corp (NYSE: O) will go ex-dividend for its latest dividend of $0.269 per share. Will history repeat itself?
Upcoming Dividend: 0.269/share
Ex-Div Date: 06/02/25
Payment Date: 06/13/25
Dividend Frequency: Monthly
Full O Dividend History »
While past performance does not guarantee future results, it’s clear that for investors who utilize Dividend Runs, O presents a strong opportunity with an implied annualized yield of 5.73%.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
