Realty Income (O Quick QuoteO - Free Report) , widely known as “The Monthly Dividend Company,” boasts an impressive history of reliable dividend payments. As a member of the S&P 500 Dividend Aristocrats, it has raised its dividend for 30 consecutive years and recorded 111 straight quarterly hikes. With a current yield of 5.7%, it outpaces peers like Agree Realty Corporation (ADC Quick QuoteADC - Free Report) at 4.31% and NNN REIT (NNN Quick QuoteNNN - Free Report) at 5.42%. Check Realty Income’s dividend history here.

Year to date, Realty Income stock has climbed more than 5%, outperforming stocks like Agree Realty and NNN REIT, as well as the Zacks REIT and Equity Trust - Retail industry. However, it slightly trailed the broader S&P 500 composite.

Still, while Realty Income’s dividend legacy is impressive, income alone shouldn't drive investment decisions. The real question is whether the company can keep this momentum going. Investors should scrutinize its growth pipeline, tenant quality and sector headwinds, like interest rate pressures and retail exposure, to determine if Realty Income’s premium yield is built on a sustainable foundation, or if cracks could eventually emerge.

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Is Realty Income's Growth and Dividend Built to Last?

Realty Income’s payout rests on a solid and reliable footing, with robust cash flows generated from more than 15,600 properties in all 50 U.S. states, the U.K. and six other countries in Europe, along with a strong balance sheet and A3 /A- credit ratings by Moody’s & S&P. O focuses on non-discretionary retail and service-based tenants, segments that tend to remain resilient across economic cycles and are less vulnerable to e-commerce disruption. Approximately 91% of its rental income is derived from these dependable, non-discretionary sectors, providing a stable and defensive revenue base.

Realty Income appears well-equipped to maintain its dividend growth trajectory. The company has undergone a notable transformation, expanding from a retail-focused net lease REIT into a diversified powerhouse with exposure across multiple sectors and geographies. Over the past decade, the company has strategically expanded beyond its retail foundation, entering the industrial sector to leverage the rise of e-commerce and omnichannel retail. This strategic shift has enhanced its market standing while reducing exposure to traditional retail risks.

Realty Income’s expansion into alternative asset classes, such as gaming and data centers, underscores its forward-looking growth strategy. Notable investments like Encore Boston Harbor and Bellagio Las Vegas, along with its collaboration with Digital Realty to invest in data centers, signal the company’s intent to tap into sectors with strong long-term growth potential. 

Realty Income’s growth strategy appears promising, fueled by its increasing global footprint, especially in Europe, which paves the way for sustained expansion. In the first quarter of 2025, Realty Income deployed $1.37 billion at initial weighted average cash yield of 7.5% and aims to reach $4 billion in total investments by year-end. Tapping into a vast $14 trillion global net lease market, the company is actively scaling its portfolio, reinforcing its strategy to drive sustainable, long-term growth through disciplined capital allocation.

Despite its solid fundamentals, Realty Income is not without challenges. Broader macroeconomic uncertainty and ongoing tariff issues may strain some of the retailers it leases to, which could impact rental collections and overall performance. Moreover, the company’s sensitivity to interest rates and sizable debt load, $27.6 billion, are noteworthy risks. In the first quarter of 2025, interest expenses rose 11.5% year over year to $268.4 million, highlighting the pressure of operating in a persistently high-rate environment.

O's Estimate Revisions and Valuation

Estimate revisions reflect a somewhat bearish trend. Consensus estimates for both the second-quarter and full-year 2025 adjusted funds from operations (AFFO) per share have declined marginally over the past week, while the same for 2026 has also moved south by a cent over the same time frame.

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Realty Income stock is trading at a forward 12-month price-to-FFO of 12.97X, below the retail REIT industry average of 14.41X and also lower than its one-year median of 13.19X. 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 16.18X, while NNN is trading at 12.32X.

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Final Take on Realty Income

Realty Income remains a dependable name for income-focused investors, supported by its strong dividend history, broad portfolio diversification, and strategic expansion into resilient and high-growth asset classes. Its 5.7% dividend yield, exposure to essential service tenants and investment-grade balance sheet offer a solid foundation for long-term income stability.

However, macroeconomic headwinds, elevated interest expenses and marginally southward estimate revisions suggest that the stock’s growth may face near-term challenges. Although Realty Income trades at a relative discount to peers like Agree Realty, it may be wise for prospective investors to hold off until there’s greater macroeconomic visibility. That said, for current shareholders, the company’s steady dividend growth, durable asset mix and reliable cash flow generation make it a solid hold, particularly for those seeking portfolio stability and dependable income.

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.