3 Reasons to Buy Realty Income Stock Like There's No Tomorrow

Realty Income (NYSE: O) stands out as a unique dividend stock for its reliability, high yield, and monthly payments. It's a top real estate investment trust (REIT) that any dividend investor would want in their portfolio, and since almost every investor should have some great dividend stocks, it applies to just about every investor. Here are three reasons to scoop up shares today.

1. Its business is resilient

REITs are generally great dividend stocks because they pay out most of their earnings as dividends, but that doesn't mean they're all the same. There are different categories of REITs depending on what kinds of properties they own, and Realty Income is a retail REIT that owns 15,600 properties globally. It leases almost 80% of its properties to retailers, and they're predominantly large, well-established retail chains. Its top three tenants are 7-Eleven, Dollar Tree and Walgreens', and more than 20% of its portfolio is in grocery stores and convenience stores.

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However, although its core focus is on these kinds of reliable, essentials chains, it has expanded into different categories and benefits from that diversity. Its tenants are in 89 different industries, and it has a presence in seven European countries.

The market has been down on real estate stocks since interest rates have been high, but despite the grim environment and investor pessimism, Realty Income has been performing well. In the 2024 fourth quarter, adjusted funds from operations (FFO), the standard per-share earnings metric for REITs, increased 4% year over year.

2. It has tons of opportunity

Management has a vetted property acquisition process to source new properties that fit its criteria and keep a high occupancy rate, which is 98.7% today.

It continues to grow through acquisitions of smaller REITs and property purchases, and it has a strong pipeline of new properties to keep growing and fund its dividend. It also has healthy credit sources to keep up its buying activity, and between the two, it's able to be highly selective about which properties it buys. From 2010 to 2024 it had $624 billion in available properties, of which is purchased 8%. Some notable buys include a Wynn Resorts property for $1.7 billion in 2023 that it leased back to the client with a 30-year lease and marked its first entry into the gaming industry, and a $900 million deal with CIM Group for 185 single-tenant retail and industrial properties. It spent $1.7 billion on property purchases in the 2024 fourth quarter.

3. The high yield, of course

Few dividend stocks can match Realty Income's track record. It's been paying a dividend since it began operations in 1969, years before it became a public company in 1996. That's 656 months of dividends. It has raised the dividend for 110 quarters consecutively, and more than 30 years annually.

All of these things are important for a great dividend stock, and sometimes that's enough; a stock like Walmart, for example, which happens to be a top 20 Realty Income tenant, has a low dividend yield of 0.9% but comes with stability and growth.

Realty Income, though, in addition to all of this, has the very attractive feature of a high yield. At today's price, which is lower due to the negative market sentiment, the dividend yields 5.6%. That's high historically, and the yield typically falls closer to the 5% range, which is still outstanding.

Realty Income stock is an excellent dividend play for any investor looking for reliable passive income, and today you can still buy it on the dip.

Should you invest $1,000 in Realty Income right now?

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Jennifer Saibil has positions in Walmart. The Motley Fool has positions in and recommends Realty Income and Walmart. The Motley Fool has a disclosure policy.