Realty Income Corp. (O) has been one of the stocks most watched by Zacks.com users lately. So, it is worth exploring what lies ahead for the stock.
Realty Income is a real estate investment trust that is designed to produce steadily growing income over time. It has paid nearly 650 consecutive monthly dividends to investors.
Realty Income (NYSE: O) stock price has underperformed the market this year. It has retreated by more than 7.4% this year while the S&P 500 and Nasdaq 100 indices have surged to their record highs.
This Dividend King offers a 5% yield and surprisingly strong growth prospect. This home goods brand is generating lots of cash and profits despite pressure and sales declines.
The cost of living for Americans has steadily risen for decades, which, I believe, makes high-quality dividend growth stocks even more appealing. Realty Income's revenue and AFFO per share climbed higher during the first quarter. The triple net lease REIT maintained almost $4 billion of liquidity as of March 31, which can easily cover its debt maturities for the foreseeable future.
Realty Income Corp. (O) closed the most recent trading day at $53.15, moving +0.26% from the previous trading session.
Realty Income is one of the most popular triple net lease REITs that operates mainly within the retail/service-oriented property sector. It has a fortress-like balance sheet, attractive, well-covered dividends, a great business model, and impressive investment activity in Europe. However, I believe it has some size-related headwinds that will cause its peers to outperform.
Realty Income's (O) focus on leasing to service, non-discretionary and low price-based retailers, accretive buyouts and balance sheet strength bode well. The steady rise in the monthly dividend is encouraging.
Recent acquisitions by Realty Income have boosted its portfolio and growth potential but have also added uncertainty to shareholder returns. The debt load has risen sharply and share base diluted significantly. While valuation seems attractive by usual metrics, a leverage-adjusted metric shows a far less attractive picture due to the drastic change in debt.
This week, I added to my positions in CSCO, PFE, and UTF. In the 2nd week of June, the Dividend Harvesting Portfolio generated $21.73 of dividend income. The Dividend Harvesting Portfolio has already generated 65.31% of the total dividend income from 2023.
With summer kicking off soon, investors may be well served by rotating to undervalued high-quality income stocks in this pricey market. Realty Income's triple-net lease structure, strong balance sheet, and growth prospects make it a compelling investment for income-focused investors. With an A- rated balance sheet, O stock is prepared to weather the current interest rate environment with its ability to source properties at attractive cap rates.
Realty Income's stock price has dropped significantly in the past 5 years, while its AFFO per share has grown by 28.5%. The company has a high starting yield of 6% and a track record of increasing dividends every quarter for the last 30 years. Despite concerns about interest rates and share dilution, O stock is currently undervalued based on historical ratios and future dividend growth potential.