The Federal Reserve has committed to maintaining a low interest rate environment through 2013, forcing income-hungry investors to shift from bonds to equities. In today’s market, REITs boast some especially attractive yields.

It may seem odd to recommend a real estate investment trust (REIT) amid the worst real estate downturn since the Great Depression.

But Realty Income (NYSE:O) is an extraordinarily diligent manager of its portfolio of commercial real estate. Even better, it’s lived up to its billing as “The Monthly Dividend Company” by increasing its dividend for 55 consecutive quarters. The firm’s conservatism ensures a consistent payout through thick and thin.

The REIT builds its portfolio by acquiring real estate from retailers at shopping centers and strip malls, and then leasing it back to them with long-term leases. Realty Income’s underwriting process involves selecting companies with enough cash flow to make the rent even during tough periods. At the end of the second quarter, the company’s average lease duration was 11.1 years, while its top 15 tenants had a cash flow-to-rent coverage ratio of about 2.35. Additionally, most of the firm’s leases are “triple-net,” which means that tenants are responsible for taxes, insurance, and maintenance.

Management has striven to reduce the company’s exposure to any one industry or region; the firm’s $4 billion portfolio of 2,523 properties spans 37 industries and 49 states. Although Realty Income’s 15 largest tenants accounted for roughly 52 percent of its revenue, no one tenant accounted for more than 5.4 percent of sales.

Convenience stores represent the firm’s largest industry concentration, contributing 19 percent of revenue, while restaurants come in a close second at 17.5 percent.

Management’s focus on both diversification and tenant selection insulate the firm’s portfolio during periods of economic malaise. While vacancies at US shopping centers stood at 11 percent at the end of the second quarter, Realty Income’s vacancies were a mere 2.7 percent of its portfolio.

Realty Income’s funds from operations (FFO) per share—a REIT metric similar to earnings per share—increased 6.7 percent year over year. Nevertheless, the company’s earnings came in slightly under consensus estimates, and management lowered its guidance for the remainder of the year. Analysts largely attributed the earnings miss to a swath of acquisitions that are slated to close later than anticipated.

Realty Income plans to continue growing via acquisition. By the end of 2011, for example, the company expects to have closed between $600 million and $800 million in transactions. Although the firm financed these transactions by issuing debt, the company’s long-term debt accounts for just 28 percent of its market capitalization. As it’s done in the past, the company may opt to finance future acquisitions by issuing additional equity, which makes dilution to shareholders a possibility.

Some analysts believe the stock trades at a premium compared to its peers, but Realty Income’s enticing 5.2 percent yield should garner price support from yield-chasing investors. To be sure, the company’s recent dividend hikes have largely been token affairs, but management expects to offer more generous increases in the future. With no debt maturities until 2013 and a low percentage of lease expirations, Realty Income should continue to weather a stagnant economy.