Key Takeaways
- Realty Income and Clorox both yield 6.1%, so $10,000 in either pays $610 a year today.
- Realty Income’s AFFO payout ratio fell from 83% in fiscal 2016 to 75% in fiscal 2025, and analysts expect 73% in 2026.
- Clorox paid out 149% of its free cash flow in dividends over the twelve months to June 30, 2026, though analysts expect that ratio to drop to 71% in fiscal 2027.
- Clorox carries less debt, at 4.3x net debt to EBITDA against Realty Income’s 5.7x.
Any investor hunting for a 6% yield from a household name is going to run into Realty Income (O) and Clorox (CLX). Both yield 6.1%.
But their August results pulled in opposite directions. Realty Income raised its 2026 guidance for AFFO per share, while Clorox closed its fiscal year to June 30, 2026, paying out more in dividends than it brought in as free cash flow.
So which is the better high-yield dividend stock?
| Metric | Realty Income (O) | Clorox (CLX) |
|---|---|---|
| Dividend yield | 6.1% | 6.1% |
| Dividend growth, 5 years | 2.9% a year (fiscal 2020 to 2025) | 2.0% a year (fiscal 2021 to 2026) |
| Dividend record (company’s words) | Raised for over 31 consecutive years | Increased annually “for a decade” (CFO) |
| Coverage, last reported | AFFO payout ratio: 75% (fiscal 2025) | Cash dividend payout ratio: 149% (TTM to June 30, 2026) |
| Coverage, forward | AFFO payout ratio: 73% (2026 consensus) | Cash dividend payout ratio: 71% (fiscal 2027 consensus) |
| Net debt/EBITDA (LTM) | 5.74x | 4.29x |
| Interest coverage (LTM) | 2.35x | 6.84x |
Realty Income keeps adding room
On Sept. 8, Realty Income announced its 136th dividend increase since its 1994 listing, and it has raised its dividend for over 31 consecutive years.
Those raises haven’t stretched it, either. AFFO per share grew from $2.88 in fiscal 2016 to $4.28 in fiscal 2025, faster than the dividend’s climb from $2.39 to $3.22 a share. That took the AFFO payout ratio from 83% to a comfortable 75%.
Analysts expect AFFO of $4.44 a share in 2026, for a forward ratio of 73%. The business is still growing. AFFO per share rose 3.8% to $1.09 in the second quarter of 2026 from a year earlier.
The risk is the debt. Net debt runs 5.7x EBITDA over the last twelve months, and interest coverage is a thin 2.4x.
Clorox needs a rebound
Clorox pays the same 6.1% yield, and its coverage tells a very different story. Over the twelve months to June 30, 2026, it paid $602 million in dividends against $405 million of free cash flow, an uncovered cash dividend payout ratio of 149%. Free cash flow fell short of the dividend in fiscal 2022, 2024 and 2026.
Net sales fell 5% from fiscal 2025 to $6.72 billion in fiscal 2026, and cash from operations fell 38%, from $981 million to $612 million, barely above its $602 million of dividends.
Analysts expect fiscal 2027 free cash flow of $881 million, more than double, which would bring the payout ratio down to a well-covered 71%. Management expects net sales up 13% to 14%, with about 9.5 points of that from the GOJO acquisition that brought in Purell, and a gross margin of about 42%. CFO Luc Bellet called the payout “a bit elevated, but we see this as something more transitory as we rebuild our gross margin.”
Only four analysts make that free cash flow estimate, though, and last year’s final consensus missed the actual by 18%. And the rebuild will come under a new CEO: on May 28, Clorox said Linda Rendle will step down for health reasons once a successor is appointed.
So which dividend wins?
Realty Income is the better high-yield dividend stock. For the same 6.1% yield, you get a dividend that’s covered today, by an AFFO payout ratio that has run between 75% and 83% every year since fiscal 2016. Clorox’s ratio swung from 59% in fiscal 2021 to 149% in fiscal 2026, and its 71% forward figure depends on free cash flow more than doubling.
Realty Income also comes out ahead on the income math. If its dividend keeps growing 2.9% a year, its pace from fiscal 2020 to 2025, $10,000 would pay about $790 in year 10. That’s a 7.9% yield on your cash today. Clorox would pay about $730 at its 2.0% a year from fiscal 2021 to 2026.
And you’re paying less than usual for it. Realty Income trades at 12.1x forward AFFO, below its 5-year average of 14.7x and not far above its 11.4x low from October 2023.
This isn’t to say Clorox’s dividend is doomed. It carries less debt, at 4.3x EBITDA, with 6.8x interest coverage, though that debt is about $5.1 billion after GOJO ($2.147 billion) and a Glad stake ($476 million), and S&P cut its rating to BBB in February 2026. And Bellet was plain about the dividend: “our commitment to support the dividend has not changed.” It’s just that I’d rather collect a 6.1% yield the business covers today.
Of course, Clorox’s fiscal 2027 is still ahead. If its gross margin gets back to about 42% and free cash flow lands near that $881 million, this one gets a lot closer.
So what is Realty Income stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
