In this video, Motley Fool contributor Jason Hall explains the path for Realty Income (O 1.01%) to market-beating returns going forward.
The S&P 500 is close to an all-time high, but not all areas of the stock market have performed equally well. In fact, the real estate sector has dramatically underperformed the overall market for the past three full years, mainly due to the relatively high-interest environment.
Realty Income 's (O 1.01%) mission is to invest in places that help it "deliver dependable monthly dividends that increase over time." It has certainly delivered on that objective.
Like bargains? You should.
The stock market offers various opportunities, and with the right strategy, a modest investment of $100 can grow into $1,000, contributing to long-term wealth building.
Healthy demand for O's properties and a diverse tenant base are likely to have benefited Q4 earnings. A robust pipeline is expected to have supported its investment activities.
Realty Income is a Buffett-style "fat pitch," trading at a 30% to 36% discount with a 47% to 60% upside potential in 2025. Realty Income's management, led by CEO Sumit Roy, leverages private equity expertise to drive long-term growth of 5% to 6% annually, potentially for decades. With a 5.8% yield and 5.2% growth, Realty Income offers a 12.4% CAGR over 30 years, rivaling Nasdaq returns but with lower volatility and A-rated monthly dividends.
In the closing of the recent trading day, Realty Income Corp. (O) stood at $55.67, denoting a +0.8% change from the preceding trading day.
Beyond analysts' top -and-bottom-line estimates for Realty Income Corp. (O), evaluate projections for some of its key metrics to gain a better insight into how the business might have performed for the quarter ended December 2024.
Lower rates can spur deal activity, growing the investment portfolio and hence leasable square feet, AFFOs, and dividends. Net new store growth in Realty Income's key clients can help boost rental incomes. Realty Income's stock is trading at a discount vs peers and also seems undervalued due to falling P/B multiples despite improving fundamentals as seen in rising book values.
Realty Income's negative sentiment is attributed to recency bias. The REIT's performance should be measured by AFFO per share growth, which has increased by 28.5% over the past five years. Realty Income offers attractive risk-adjusted returns due to low beta and solid returns.
The S&P 500 index (^GSPC -0.27%) offers a miserly 1.2% yield. Real estate investment trusts (REITs) can get you 3.8%, three times higher.