Realty Income is a top REIT known for its monthly dividends, strong business model, and high market cap, with tenants like Dollar General and 7-Eleven. Despite macroeconomic sensitivity, Realty Income's focus on non-discretionary services and new verticals like gaming and data centers supports long-term growth. The company's strong balance sheet and consistent AFFO/share growth, with a 5% CAGR, enhance shareholder value and dividend potential.
Realty Income is loved for its track record and strong management. However, it's criticized for its massive size, slowing growth, and growing tenant worries. We discuss the good, the bad, and the ugly.
There are a lot of great dividend stocks. Many companies offer higher-yielding payouts, which have steadily increased over the years.
O continues to deliver on its richer spreads and healthier balance sheet, thanks to the excellent investments at weighted average cash yield of over 7% and higher rental recapture rates. These developments have allowed the REIT to sustain the robust AFFO per share growth and accelerating dividend per share increases against its 10Y averages. While O may appear to offer a mixed FY2025 guidance, most of the bottom-line headwinds are merely attributed to non recurring expenses, otherwise culminating in a +9.8% YoY increase.
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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.
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With a diverse tenant base, O offers growth and dividends. But can tariffs, inflation and high rates affect its long-term performance?
Realty Income is not a 'Buy' at current levels due to unpredictable long-term valuations and profitability influenced by interest rates. Higher medium-term interest rates reduce O's valuation and AFFO growth, making its current valuation potentially a value trap. Better REIT opportunities exist, such as Terreno Realty, which boasts low debt, strong management, and superior AFFO growth.
Realty Income faces challenges with missed FFO expectations, retail sector pressures impacting its tenants and rising provisions. All these weigh down on operating earnings and FFO margins. AFFO growth is likely to be muted due to a more competitive, higher-for-longer rates environment. On the bright side, O stock is trading at a meaningful larger-than-usual discount vs its peers.
Realty Income Corp. (O) concluded the recent trading session at $56.28, signifying a +0.86% move from its prior day's close.
Realty Income Corporation's performance over the last 10 years does not justify investor enthusiasm today. Real after inflation total returns over 10 years were 34%, the real dividend is up 10%, and the real stock price is down 29%. The stock underperformed vs. Total Market funds, dividend-focused funds, and large REITs, and offered mixed results vs. triple net REITs.