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Should You Hold Onto O Stock in 2025 Beyond Its 9% YTD Growth?
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Key Takeaways
O has outperformed peers and benchmarks in 2025, fueled by resilient income and dividend growth.
Realty Income invested $1.37B in Q1 2025 and targets $4B for the year across the United States and Europe.
O maintains 98.5% occupancy and a 5.63% dividend yield, backed by a stable, non-discretionary tenant base.
Realty Income’s (O - Free Report) solid 9.3% year-to-date (YTD) return has left many investors questioning whether the REIT remains attractively valued or if a better entry opportunity lies ahead.
O stock has not only outpaced its close peers, such as the free-standing REITs like Agree Realty Corporation (ADC - Free Report) and NNN REIT, Inc. (NNN - Free Report) , but also outperformed the Zacks REIT and Equity Trust - Retail industry and the S&P 500 composite.
While the company’s strategic investments in the United States and Europe augur well for long-term growth and the dividend hike announced earlier this month gives a boost to investors’ sentiment, its investment thesis presents both compelling growth drivers and legitimate concerns. Let’s explore them to ultimately arrive at the decision of whether to hold the stock for now, buy or sell and book profits.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
What Is Driving Realty Income Stock's Performance?
Realty Income stands out as a resilient and dependable REIT, offering stability and consistent income for fixed-income investors. Its evolution from a traditional net lease operator to a diversified, multi-sector global player has enhanced its long-term appeal. With 15,627 income-producing properties across the United States and Europe, the company focuses on non-discretionary retail and service-based tenants — sectors that typically perform well through economic cycles and resist e-commerce pressures. Around 91% of its rent stems from such stable sectors.
The company’s disciplined acquisition strategy and focus on quality assets have helped it consistently achieve high occupancy rates, with a historical median of 98.2%, surpassing the industry norm. As of March 31, 2025, occupancy remained robust at 98.5%, and management projects a continued rate above 98% for the year.
Realty Income’s strategic expansion, particularly in Europe and into growth sectors like gaming and data centers, signals a forward-looking growth trajectory. In the first quarter of 2025, it invested $1.37 billion at a 7.5% yield and targets $4 billion for the year. With an estimated $14 trillion global net lease market and a projected $4 billion in 2025 investments, Realty Income is positioning itself for long-term growth.
Supported by strong financials, investment-grade credit ratings, a 5.63% dividend yield and a history of consistent payouts, Realty Income remains a dependable option for income investors. Known as “The Monthly Dividend Company,” this member of the S&P 500 Dividend Aristocrats has made 111 straight quarterly increases. Its latest and 131st dividend hike since its 1994 NYSE debut is payable on July 15 to shareholders of record as of July 1.
What Hinders Realty Income's Progress?
While Realty Income has many strengths, it also faces meaningful headwinds. Macroeconomic uncertainty and tariff woes could place additional pressure on retailers within its portfolio, potentially affecting rental income and operational performance.
Additionally, interest rate sensitivity and elevated leverage ($27.6 billion in debt) remain key concerns in a high-rate environment. Its interest expenses were up 11.5% year over year to $268.4 million in the first quarter of 2025.
O’s Estimate Revisions and Valuation
The estimate revisions reflect a somewhat bullish trend. The Zacks Consensus Estimate for 2025 adjusted funds from operations (AFFO) per share has climbed marginally over the past month, while the same for 2026 has also moved north by a cent over the same time frame. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
O’s Consensus Estimate Trend (60 Days)
Image Source: Zacks Investment Research
Realty Income stock is trading at a forward 12-month price-to-FFO of 13.41X, below the retail REIT industry average of 15.09X but higher than its one-year median of 13.16X. While Realty Income stock is currently trading at a reasonable discount compared to its industry peer Agree Realty Corporation, it is at a slight premium to NNN. This valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 17.45X, while NNN is trading at 12.56X.
Forward 12 Month Price-to-FFO (P/FFO) Ratio
Image Source: Zacks Investment Research
Final Take on Realty Income
Realty Income stands out as a premier dividend stock, offering dependable income and solid long-term growth potential. Its revenue stability is supported by a diverse tenant base and a net lease strategy focused on essential, value-driven sectors, which help cushion it against economic volatility.
The REIT’s expansion into emerging sectors like gaming and data centers demonstrates a forward-looking approach to portfolio diversification. Backed by a strong balance sheet and investment-grade credit ratings, Realty Income is well-equipped to adapt to changing market dynamics.
While the stock trades at a discount compared to peers such as Agree Realty, it seems prudent for investors to wait for more macroeconomic clarity before initiating new positions. However, for existing investors, Realty Income’s consistent dividend growth, defensive asset base and resilient cash flows make it a compelling hold, especially for those prioritizing stability and income in their portfolios.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Should You Hold Onto O Stock in 2025 Beyond Its 9% YTD Growth?
Key Takeaways
Realty Income’s (O - Free Report) solid 9.3% year-to-date (YTD) return has left many investors questioning whether the REIT remains attractively valued or if a better entry opportunity lies ahead.
O stock has not only outpaced its close peers, such as the free-standing REITs like Agree Realty Corporation (ADC - Free Report) and NNN REIT, Inc. (NNN - Free Report) , but also outperformed the Zacks REIT and Equity Trust - Retail industry and the S&P 500 composite.
While the company’s strategic investments in the United States and Europe augur well for long-term growth and the dividend hike announced earlier this month gives a boost to investors’ sentiment, its investment thesis presents both compelling growth drivers and legitimate concerns. Let’s explore them to ultimately arrive at the decision of whether to hold the stock for now, buy or sell and book profits.
Year-to-Date Price Performance
Image Source: Zacks Investment Research
What Is Driving Realty Income Stock's Performance?
Realty Income stands out as a resilient and dependable REIT, offering stability and consistent income for fixed-income investors. Its evolution from a traditional net lease operator to a diversified, multi-sector global player has enhanced its long-term appeal. With 15,627 income-producing properties across the United States and Europe, the company focuses on non-discretionary retail and service-based tenants — sectors that typically perform well through economic cycles and resist e-commerce pressures. Around 91% of its rent stems from such stable sectors.
The company’s disciplined acquisition strategy and focus on quality assets have helped it consistently achieve high occupancy rates, with a historical median of 98.2%, surpassing the industry norm. As of March 31, 2025, occupancy remained robust at 98.5%, and management projects a continued rate above 98% for the year.
Realty Income’s strategic expansion, particularly in Europe and into growth sectors like gaming and data centers, signals a forward-looking growth trajectory. In the first quarter of 2025, it invested $1.37 billion at a 7.5% yield and targets $4 billion for the year. With an estimated $14 trillion global net lease market and a projected $4 billion in 2025 investments, Realty Income is positioning itself for long-term growth.
Supported by strong financials, investment-grade credit ratings, a 5.63% dividend yield and a history of consistent payouts, Realty Income remains a dependable option for income investors. Known as “The Monthly Dividend Company,” this member of the S&P 500 Dividend Aristocrats has made 111 straight quarterly increases. Its latest and 131st dividend hike since its 1994 NYSE debut is payable on July 15 to shareholders of record as of July 1.
What Hinders Realty Income's Progress?
While Realty Income has many strengths, it also faces meaningful headwinds. Macroeconomic uncertainty and tariff woes could place additional pressure on retailers within its portfolio, potentially affecting rental income and operational performance.
Additionally, interest rate sensitivity and elevated leverage ($27.6 billion in debt) remain key concerns in a high-rate environment. Its interest expenses were up 11.5% year over year to $268.4 million in the first quarter of 2025.
O’s Estimate Revisions and Valuation
The estimate revisions reflect a somewhat bullish trend. The Zacks Consensus Estimate for 2025 adjusted funds from operations (AFFO) per share has climbed marginally over the past month, while the same for 2026 has also moved north by a cent over the same time frame. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
O’s Consensus Estimate Trend (60 Days)
Image Source: Zacks Investment Research
Realty Income stock is trading at a forward 12-month price-to-FFO of 13.41X, below the retail REIT industry average of 15.09X but higher than its one-year median of 13.16X. While Realty Income stock is currently trading at a reasonable discount compared to its industry peer Agree Realty Corporation, it is at a slight premium to NNN. This valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 17.45X, while NNN is trading at 12.56X.
Forward 12 Month Price-to-FFO (P/FFO) Ratio
Image Source: Zacks Investment Research
Final Take on Realty Income
Realty Income stands out as a premier dividend stock, offering dependable income and solid long-term growth potential. Its revenue stability is supported by a diverse tenant base and a net lease strategy focused on essential, value-driven sectors, which help cushion it against economic volatility.
The REIT’s expansion into emerging sectors like gaming and data centers demonstrates a forward-looking approach to portfolio diversification. Backed by a strong balance sheet and investment-grade credit ratings, Realty Income is well-equipped to adapt to changing market dynamics.
While the stock trades at a discount compared to peers such as Agree Realty, it seems prudent for investors to wait for more macroeconomic clarity before initiating new positions. However, for existing investors, Realty Income’s consistent dividend growth, defensive asset base and resilient cash flows make it a compelling hold, especially for those prioritizing stability and income in their portfolios.
At present, Realty Income carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.