Key Takeaways:
- Realty Income currently offers a 5.7% forward dividend yield, which is near the top of its historical range.
- Earnings and dividends are projected to grow in the low-single-digits over the next 3 years.
- Wall Street analysts believe the stock has just over 10% upside today.
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Realty Income, also known as “The Monthly Dividend Company,” is still a go-to pick for dividend investors looking for steady, reliable dividends.
With a huge portfolio of essential triple net lease real-estate properties (tenants agree to pay property taxes, insurance and maintenance on top of just rent), and a dividend that’s well-covered, it’s exactly the kind of consistency REIT investors love.
Why Has Realty Income‘s Stock Been Flat for the Past 5 Years?
Realty Income is still down more than 30% from its 2022 highs, and here’s what’s been dragging it down:
- Rising interest rates have made dividend-paying REITs like Realty Income less attractive compared to safer alternatives like Treasury bonds and even high-yield savings accounts.
- Earnings growth has slowed, with 2023 and early 2024 showing weaker-than-usual results and little AFFO per-share growth.
- Investor attention has shifted to AI and tech stocks, leaving defensive stocks like REITs overlooked.
- Concerns about commercial real estate have weighed on the entire REIT sector, even though Realty Income’s retail-focused portfolio is relatively stable.
- Frequent equity issuance to fund acquisitions has raised fears of shareholder dilution, putting additional pressure on the stock.
Still, Realty Income continues to collect rent, grow its portfolio, and deliver monthly income to shareholders.
Analysts Think the Stock Has Nearly 10% Upside Today
Analysts have an 18-month average price target of $62/share for Realty Income, which implies that they think the stock has about 10% upside from its current price for $56/share.
The stock also offers a 5.7% forward dividend yield, so buying when the stock has 10% upside is really just icing on the cake.
See why Realty Income could be undervalued today with TIKR (It’s free) >>>
1: Dividend Yield
Realty Income’s forward dividend yield currently sits at 5.7%, which is well above its 5-year average of 4.9%. The yield has touched as high as 6.7% last year.
If you’re looking for consistent monthly dividends, Realty Income remains one of the most reliable options on the market.
Find high-quality dividend stocks that look even better than Realty Income today. (It’s free) >>>
2: Dividend Safety
Realty Income’s dividend is healthy, and the company is set to continue delivering earnings and dividend growth for years to come.
Realty Income’s earnings are safe because the company owns diversified, essential real estate properties. A significant portion of Realty Income’s revenue, around 20%, comes from high-traffic, essential retail tenants such as grocers and convenience stores.
As an “essential properties” kind of REIT, Realty Income is known for its stability. Even in 2020, Realty Income posted earnings growth, and analysts expect the stock to continue growing earnings.
For 2024, dividends were just about 75% of Realty Income’s Adjusted Funds from Operations. AFFO is one of the best metrics to use to measure a REIT’s earnings, and a 75% AFFO dividend payout ratio is pretty healthy for a REIT.
It’s not the fastest-growing stock, but Realty Income delivers what dividend investors tend to value most: predictable dividends with solid earnings coverage.
See Realty Income’s full growth forecast and analyst estimates. (It’s free) >>>
3: Dividend Growth Potential
Realty Income’s dividend growth might be slow, but it’s steady.
Dividends are expected to grow in the low-single-digits over the next 3 years, while AFFO (REIT earnings metric) is also expected to grow in the low-single-digits with a bit more volatility. Still, dividends have marched upward at a consistent pace, even when earnings dipped.
In a market where many companies are facing earnings pressure, Realty Income stands out for its reliability and long-term discipline.
TIKR Takeaway
Realty Income might not be a fast-growing stock, but for long-term investors chasing dividends, it checks all the right boxes with a safe 5.7% forward dividend yield, monthly dividends, and just over 10% upside based on analyst price targets.
If you want steady cash flow and long-term stability, this monthly dividend REIT is worth a spot on your watchlist.
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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 stocks mentioned. Thank you for reading, and happy investing!
