Here's How Many Shares of Realty Income Stock You Should Own to Get $1,000 in Yearly Dividends

Realty Income (NYSE: O) has become a dividend stalwart, even for a REIT that has to pay out at least 90% of its net income in the form of dividends. The commercial property owner, otherwise known as the "monthly dividend company," has increased its payout at least once a year since 1994.

Additionally, its dividend yield now stands at 5.9%, more than quadruple the S&P 500 (SNPINDEX: ^GSPC) average of 1.35%. Thanks to this massive return, generating $1,000 of sustainable dividend income is possible on a relatively small investment. Here's how.

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How much Realty Income must one buy?

Right now, one must buy $16,950 in Realty Income stock to earn that return annually. At current stock prices, that amounts to 316 Realty Income shares.

Admittedly, higher interest rates may have suppressed its stock, which is down 37% from its high in 2020. Nonetheless, Realty Income grew its dividend and property portfolio despite the higher rates.

Moreover, its payout is likely sustainable. The company owns more than 15,600 single-tenant properties, and numerous public-facing retail companies such as Walmart and Dollar Tree lease its properties. With an occupancy rate close to 99%, it has built a stable revenue stream.

In 2024, Realty Income reported almost $4.19 per share in adjusted funds from operations (AFFO), a measure of a REIT's free cash flow. Since the dividend cost the company $3.13 per share in 2024, it generates more than enough cash to cover its payout.

Additionally, the company has guided for between $4.22 per share and $4.28 per share in AFFO. While not a huge increase, it gives Realty Income enough latitude to keep growing its dividend.

Indeed, Realty Income is unlikely to deliver rapid growth. But if one's goal is a steady, growing income stream, investors can earn $1,000 in dividend income on a comparatively modest investment.

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

Before you buy stock in Realty Income, consider this:

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Will Healy has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income and Walmart. The Motley Fool has a disclosure policy.