Four compelling reasons to invest in Realty Income Corporation's stock without hesitation.
Investing these days has been tricky, with the landscape shifting subtly yet significantly. What used to work well isn't quite cutting it like before. Perhaps it's time to reconsider your portfolio target allocation, dialing back on the higher-risk growth stocks to make room for more value and income options.
With this in mind, Realty Income (O -0.30%) could be an excellent foundational dividend payer for most portfolios. But what exactly is Realty Income, and why should it be in your watchlist?
What is Realty Income?
Realty Income isn't a household name, but its services likely touch your daily life. This is a real estate investment trust (REIT) that specializes in owning revenue-generating properties, such as hotels, apartment buildings, and office spaces. However, Realty Income is unique in its focus on retail space, including strip malls, shopping centers, and standalone shops. They own 15,450 retail properties across the US and Europe, leasing them to tenants like Dollar General, FedEx, Walmart, and Home Depot[1][2]. Nearly all of their properties are currently leased, with an average lease term of 9.4 years[1].
So why invest in Realty Income? Let's examine four compelling reasons.
Four reasons to consider Realty Income stock
1. Undervalued potential
While some stocks deserve to take a hit, Realty Income's recent 15% slump from its October high and stagnant performance since the COVID-19 crisis doesn't seem to have a significant, well-supported cause[1][2]. Investors can profit from the market's oversight by buying now, benefitting from Realty Income's healthy 5.8% forward-looking dividend yield[1][2].
2. Reliable and growing dividend
Realty Income has built a solid track record of consistently growing revenue and profits over the past three years[1][2]. Its stable financial performance enables the REIT to maintain a reliable dividend and has allowed for annual increases for 30 consecutive years, including raising it every quarter for 109 consecutive quarters[1][2].
3. Monthly dividend income
Beyond its long-term dividend growth record, Realty Income offers monthly dividend payouts, making it an attractive option for investors looking for regular income to cover recurring expenses such as house payments or utility bills[1][2].
4. Resilient business model
Despite the retail apocalypse buzz, the retail industry's challenges don't significantly impact Realty Income. Their tenants, including Walmart and FedEx, are among the most resilient consumer-facing companies that can continue paying their rent during challenging times[1][2]. In fact, Realty Income is well-equipped to navigate even during the height of the COVID-19 pandemic, as evidenced by its remarkable 97.9% occupancy rate, with over 93% of the due rent being collected during the period[1].
Enrichment Data:
- Realty Income (O) is a publicly traded retail-focused REIT with over 15,450 properties reflecting a diverse portfolio and steady revenue from globally recognized tenants like Dollar General, FedEx, and Walmart[1].
- Despite the COVID-19 crisis, Realty Income successfully maintained an impressive 98.7% occupancy rate at the end of Q3 2024 with 93.5% of its due rent being collected[1].
- Over the past five years, Realty Income's dividend has grown at an annualized rate of 5.8%, while per-share funds from operations (FFO) also increased substantially[1].
- Realty Income's sustainable business model and revenue yield have made it a popular choice among investors with a focus on regular income and capital appreciation[1][2].
- In September 2022, Realty Income reported a 4% increase in its FFO for Q3 2022, indicating the company's stability and resilience to economic challenges[1].
- The company boasts an impressive 128-year history of raising its dividend, offering income-focused investors confidence and growth potential[1][2].
- Despite recent market volatility, Realty Income remains an attractive investment opportunity for both income-focused and growth-oriented investors seeking stable returns and potential long-term capital appreciation[1].
In light of the current investment landscape's volatility, it might be prudent to explore options like Realty Income, a real estate investment trust (REIT), as it could provide a steady source of income. Given Realty Income's unique focus on retail space and its robust portfolio of leased properties from tenants like Dollar General, FedEx, and Walmart, investing in their stock could offer an attractive opportunity for diversifying your portfolio and potentially boosting your income through their regular dividend payouts.
