5 Reasons to Buy Realty Income Stock Like There’s No Tomorrow

The retail REIT is still a reliable investment in an unpredictable market.

Over the past few months, the Trump Administration’s unpredictable tariffs, the intensifying trade wars, and fears of a global recession drove many investors away from higher-risk stocks. Elevated interest rates also kept them locked into certificates of deposits (CDs), T-bills, and bonds.

In this kind of market, there is somewhat less interest in buying dividend stocks. However, there’s still one stock worth buying with both hands as the bulls seek other alternatives: the real estate investment trust (REIT) Realty Income (O 0.02%). Here are five solid reasons Realty Income remains an excellent investment in this choppy market.

Plants sprouting from stacks of coins.

Image source: Getty Images.

1. Realty Income has scale and diversification

Realty Income is a retail REIT that purchases lots of properties, rents them out to businesses, and splits that rental income with its investors. REITs need to pay out at least 90% of their taxable income as dividends to maintain a favorable tax rate.

REITs can struggle if they’re too exposed to a single tenant or a struggling sector. However, Realty leases its 15,621 properties to 1,565 different clients in over 89 industries. That diversification and scale, which further improved after it merged with its smaller competitor Spirit Realty Capital last year, should insulate it from economic downturns.

Moreover, Realty Income is a triple net lease REIT, which means its tenants are responsible for covering all of their own real estate taxes, insurance costs, and maintenance fees. That streamlined business model shields it from any unexpected expenses.

2. Realty Income’s stronger tenants can offset weaker ones

Realty Income prefers to rent its properties to recession-resistant retailers, like convenience stores, grocery stores, and discount stores. Its top tenants in 2024 included Walgreens, 7-Eleven, Dollar General, and Dollar Tree, but no single tenant accounted for more than 3.5% of the company’s annualized rent.

Some of those tenants, including 7-Eleven, Walgreens, and Dollar Tree, struggled with store closures over the past few years. However, other tenants, like Dollar General, Walmart, and Home Depot, are still opening new stores.

The growth of Realty’s stronger tenants should offset the declines of its weaker ones. That’s why its occupancy rate has never dropped below 96% since its initial public offering (IPO) in 1994. Its year-end occupancy rate rose from 98.6% in 2023 to 98.7% in 2024.

3. Realty Income pays rising monthly dividends

Realty Income pays monthly dividends and has raised its payout 130 times since its IPO. It pays a forward yield of 5.6%, compared to the 10-year Treasury’s 4.3% yield.

Realty’s adjusted funds from operations (AFFO), which REITs use to track their profitability, rose 4.8% to $4.19 per share in 2024. It expects that figure to rise 0.7%-2.1% to $4.22-$4.28 per share in 2025. That should easily cover its forward annual dividend rate of $3.22 per share.

4. Realty Income looks cheap relative to its industry peers

At $57 per share, Realty Income trades at just 13 times the midpoint of its AFFO estimate for 2025. Vici Properties, another well-run REIT that mainly focuses on casinos and other experiential properties, trades at 14 times this year’s AFFO. Agree Realty — a smaller retail REIT that serves big-box retailers, supermarkets, off-price retailers, and drugstores — trades at 18 times this year’s AFFO.

5. It will profit from declining interest rates

Lastly, Realty Income will attract more investors as interest rates decline. It struggled in 2022 and 2023 as rising interest rates made it more expensive to purchase new properties, but gave CDs and T-bills higher yields than its monthly dividends.

However, the Federal Reserve cut its benchmark rates three times in 2024 and will likely reduce those rates again this year. As those rates come down, Realty can accelerate its expansion again and attract more income-seeking investors. Therefore, it makes sense to load up on Realty’s stock before those rate cuts happen.

Leo Sun has positions in Realty Income and Vici Properties. The Motley Fool has positions in and recommends Home Depot, Realty Income, and Walmart. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.

Source link

Visited 1 times, 1 visit(s) today

Related Article

These are the best audio apps for Android (that aren’t Spotify)

One of the most important tasks of any phone, especially an Android phone, is to give you something to listen to. So if you’re searching for the best audio app you can download onto your Android, I’ve got some suggestions. What follows is a selection of seven useful apps for audio fans. These aren’t just

SCA’s World of Coffee Trade Show Heading to Brussels in 2026

Daily Coffee News Staff | June 19, 2025 SCA press image.   The Specialty Coffee Association just announced that its flagship European trade show will be taking place in Brussels, Belgium, in 2026.  World of Coffee Brussels is expected to draw thousands of coffee professionals to the Brussels Expo center June 25-27, 2026. The announcement

OnePlus rumored to be working on new gaming series

OnePlus is apparently working on an entirely new line of products, which will be very gamer-oriented. The smartphones in this line will have bigger batteries than the other OnePlus devices, flagship chipsets, and dedicated gaming triggers. The bad news is that initially this new series will only be available in China. But of course, if

The golden Trump Phone is almost certainly not made in the US

Not content with a real estate empire and the presidency of the United States, the Trump family is wading into the phone wars like it’s 2011 with a shiny gold monstrosity called the T1, the marketing of which leans extensively on the narrowest idea of patriotism. Beyond the immediate question — why do this, like,

Leaked images show off Samsung Galaxy Z Flip7 colors, storage info also leaks

Leaked info shows that the Samsung Galaxy Z Flip7 will be widely available in three colors: Jet Black, Blue Shadow and Coral Red. Traditionally, there are a few additional colors that are available exclusively through Samsung.com (those have not leaked yet). The first leaked official images of the phone offer a better look at what

How a RobotArm Coffee Vending Machine Transforms Cafe Service

As the demand for convenient and high-quality coffee experiences continues to rise, the introduction of Fully Automated Coffee Vending Machines [https://www.annorobots.com/fully-automated-coffee-vending-machine/]is revolutionizing the cafe service industry. According to a recent report by the National Coffee Association, approximately 64% of Americans enjoy coffee daily, driving innovation in automated solutions that cater to this growing market. These

Oppo Find X9 Pro’s telephoto camera detailed

Oppo has already been rumored to be switching things up in the camera department on its upcoming Find X9 Pro, going from two telephotos on its predecessor to a single 200 MP snapper. Today a new rumor out of China details that camera, and reveals that it’s not going to be using the Samsung ISOCELL

Apple’s foldable phone to launch in late 2026, Samsung panels already ordered

Ming-Chi Kuo, one of the most renowned Apple-related analysts, shared an interesting report regarding Apple’s future foldable phone. We’ve heard many rumors about the device in the past, but according to the latest supply chain analysis, the Cupertino-based company is close to releasing a bendy. The first evidence comes from the assembly supplier for Apple,

Redmi K80 Ultra detailed specs emerge

The Redmi K80 Ultra is launching soon in China, and we now have a detailed spec sheet to work with. The brand shared more details on its official Weibo page and tipster Experience More also chimed in with some additional info. Redmi K80 Ultra color options As per the new reports, Redmi K80

vivo T4 Lite’s key specs, design, and launch date officially revealed

A couple of days ago, vivo said that it would soon launch the T4 Lite with a 6,000 mAh battery for under INR10,000 ($115/€100). Today, the brand announced that the T4 Lite will be unveiled in India on June 24 at noon local time. The vivo T4 Lite will come in Prism Blue and Titanium

Honor Magic V5 surfaces in first official look

Honor is gearing up to launch its next flagship foldable phone with the Magic V5 and the teaser campaign is now in full swing ahead of the big launch set to take place on July 2 in Shenzhen, China. Honor has now shared our first official look at the device in its folded state. It

Klarna launches a US carrier, will expand to the UK and Germany soon

First Trump, now Klarna – everyone seemingly wants a piece of the lucrative US carrier market. Klarna, the Buy Now Pay Later app, has just announced that it’s launching its own mobile phone plan in the US, which will be accessible directly in the Klarna app. The $40 per month plan includes “unlimited 5G data

Exact date and time for Samsung’s next Unpacked event leak

According to legendary leaker Evan Blass, Samsung’s next Unpacked event is taking place on July 9 at 10 AM EDT (that’s 7 AM in LA, 3 PM in London, 4 PM in Paris and Berlin, 7:30 PM in India, and 11 PM in Korea). The use of that time zone in the leak seems to

Google Maps gets a bunch of updates in Europe just in time for the summer

Google Maps’ feature that uses AI to predict when walking or taking transit will get you to your destination in roughly the same amount of time as driving is headed to Copenhagen, Stockholm, and Warsaw. In cities like Hamburg, Madrid, Barcelona, Milan, Rome, Zurich, Budapest, Vienna, and Brussels, you will be able to see where

Celebrate Pride Month With These Creative Café Drinks: Part Two

Meet the coffee shops indulging in fun flavors of blood orange, peach, cereal, and marshmallow all month long. BY EMILY JOY MENESESBARISTA MAGAZINE ONLINE Featured image courtesy of Ceresia Coffee Roasters The Pride celebrations are still going strong! Last week, we released part one of this article series and heard from three coffee shops about

1
0
Would love your thoughts, please comment.x
()
x