Realty Income stock is highly rated by Wall Street analysts as a buy. The stock indeed offers many positives, such as its above-average yield, monthly payouts, and a proven and resilient business model. However, the bullish sentiment understated the negatives. The valuation multiple is attractive when adjusted for growth.
Zacks.com users have recently been watching Realty Income Corp. (O) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
Realty Income (O) stock has experienced an impressive run of late. Let's delve deeper to check whether it is too late to buy the shares or if there is still an opportunity to accumulate them.
In 12+ months, we will look back wishing we had bought more of these REITs.
Realty Income stock is down so far in 2024 and is roughly flat even including dividends. The business is largely doing well, although there are some legitimate concerns.
This month marks my tenth year as a shareholder of Realty Income. O is the world's largest net lease REIT and the fourth largest REIT by market capitalization. Over the past ten years, O's portfolio and business have fundamentally changed, adding business units and absorbing large competitors.
In the most recent trading session, Realty Income Corp. (O) closed at $57.73, indicating a +0.17% shift from the previous trading day.
After we received decreasing CPI and PPI data points, the market has recalibrated the interest rate path. As the probabilities of first interest rate cuts have gone up, O's share price has increased accordingly. These dynamics clearly confirm that there is a huge price appreciation potential in O, stemming from the normalization in interest rate.
Realty Income demonstrates strong performance amid a quite challenging environment, and the management's aggressive guidance hikes suggest confidence in the company's prospects. The stock's historical seasonality analysis suggests that it usually performs stronger in the second half of a year. My valuation analysis suggests that the stock is around 30% undervalued.
Realty Income and Comcast are trading 2% and 10% lower this year, respectively, through Tuesday's close. Realty Income and its conservative approach along with monthly dividend checks will shine if rates start to fall this year.
Interest rates will soon go from a headwind to a tailwind for dividend stocks. Falling rates should boost Realty Income's valuation while lowering its cost of capital, allowing it to acquire more properties.
Realty Income's dividend yield is near its highest levels in a decade. The net lease REIT has the giant size and scale to do things that smaller peers can't easily consider.