Key Takeaways
- Realty Income yields 6.1% and Energy Transfer 6.8%, and both raised their 2026 outlooks in early August.
- Realty Income paid out 75% of its AFFO in fiscal 2025, with 73% expected for fiscal 2026. Energy Transfer’s distributable cash flow covered its distribution 1.8x in fiscal 2025, with 2.1x expected for fiscal 2026.
- Realty Income has raised its dividend for over 31 consecutive years. Energy Transfer’s distribution fell from $1.22 a unit in fiscal 2019 to $0.63 in fiscal 2021, then climbed back to $1.34 in fiscal 2025.
- Energy Transfer’s forward coverage rests on a 23% jump in distributable cash flow per unit that analysts expect for fiscal 2026.
Any income investor hunting for a yield of 6% or more is going to run into Realty Income (O) and Energy Transfer (ET).
Both just gave that investor some good news. When Energy Transfer reported on Aug. 4, it raised its 2026 adjusted EBITDA guidance to $18.8 billion to $19.1 billion. Realty Income followed the next day and raised its 2026 AFFO guidance to $4.44 to $4.45 a share.
So which is the better high-yield dividend stock?
| Metric | Realty Income (O) | Energy Transfer (ET) |
|---|---|---|
| Dividend yield | 6.1% | 6.8% |
| Dividend growth, fiscal 2020 to fiscal 2025 | 2.9% a year | 7.8% a year |
| Record (company’s own count) | Raises for over 31 consecutive years; 136 increases since its 1994 listing | 19 consecutive quarterly increases |
| Coverage, fiscal 2025 | AFFO payout ratio: 75% | Distributable cash flow coverage: 1.78x |
| Coverage, fiscal 2026 consensus | AFFO payout ratio: 73% | Distributable cash flow coverage: 2.13x |
| Net debt / EBITDA (LTM) | 5.74x | 3.98x |
Realty Income’s monthly check keeps growing
Realty Income’s stated mission is to deliver “dependable monthly dividends that increase over time.” On Sept. 8, it announced its 136th dividend increase since its 1994 listing, and it has raised its dividend for over 31 consecutive years.
The business behind the dividend is still growing. AFFO per share rose 3.8% to $1.09 in the second quarter of 2026 from the same quarter a year before.
Coverage has improved, too. Its AFFO payout ratio fell from 83.0% in fiscal 2016 to 75.2% in fiscal 2025, because AFFO per share grew faster than the dividend.
The catch is speed and debt. The dividend grew just 2.9% a year from fiscal 2020 to fiscal 2025. Net debt runs 5.74x EBITDA, and EBIT covers interest 2.35x over the last twelve months.
Energy Transfer’s comeback distribution
Realty Income’s case starts with its record. Energy Transfer’s starts with how much cash sits behind the check. (Energy Transfer is a partnership, so it pays distributions on units, and holders get a K-1 at tax time.)
Its distributable cash flow covered the distribution a well-covered 1.78x in fiscal 2025, and analysts expect 2.13x in fiscal 2026. Behind that forecast is a 23% rise in distributable cash flow per unit, from $2.38 to $2.92. The first half of the year supports it. Distributable cash flow attributable to partners, as adjusted, rose 32% to $2.59 billion in the second quarter of 2026 from the same quarter a year before. Last year’s final consensus landed within 2% of the actual.
CEO Thomas Long says the partnership is “targeting a long-term annual distribution growth rate of 3% to 5% and maintaining our leverage targets of 4 to 4.5x EBITDA.” The numbers fit that plan. The distribution rose 4.7% in fiscal 2025, and net debt sits at 3.98x EBITDA, just under the range. On Oct. 6, Energy Transfer agreed to buy Vaquero Midstream for about $2.625 billion, $1.95 billion of it in cash, a deal it expects to add to distributable cash flow per unit right away.
The record is the weak spot. Distributions fell from $1.22 a unit in fiscal 2019 to $0.63 in fiscal 2021, then climbed back to $1.34 in fiscal 2025.
That’s why the 7.8% a year from fiscal 2020 to fiscal 2025 flatters it: the rate starts in the middle of the cut. Distributable cash flow per unit also stayed flat over the last few years, at $2.40 in fiscal 2022 and $2.38 in fiscal 2025, so coverage narrowed from 2.40x to 1.78x.
So which dividend wins?
Energy Transfer is the better high-yield dividend stock. It pays the bigger check, 6.8% against 6.1%. Its distributable cash flow covers that check 1.78x, with 2.13x expected. And its net debt is 3.98x EBITDA, against 5.74x at Realty Income.
At each dividend’s pace now, 4.7% a year for Energy Transfer (its fiscal 2025 rise) and 2.9% for Realty Income, $10,000 would pay about $1,027 in year 10 from Energy Transfer and about $787 from Realty Income, and Realty Income’s income never catches up. That’s more than a 10% yield on your original cash.
This isn’t to say Realty Income’s dividend isn’t safe. It eats up a comfortable 75% of AFFO, the business keeps growing, and occupancy was 98.8% at June 30, 2026. It’s just that, when it comes down to it, Energy Transfer pays more, from a well-covered distribution, with less debt.
Of course, that 2.13x rests on distributable cash flow per unit jumping 23% this year. The third-quarter report will show whether the first half’s pace holds.
So what is Energy Transfer 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!
