Dividend stocks tend to gain appeal among a certain group of investors when the market is volatile. These investors turn to safe-haven stocks in times of market upheaval because dividends tend to be paid out even if the value of the stock drops. It's a way to balance out a portfolio that might otherwise get hit hard in a downturn. In a growing market, these stocks can still be attractive for the passive income they generate.
Realty Income(NYSE: O) is one of the best dividend stocks you can buy, and it looks better than ever right now. Here are three reasons to buy Real Income stock today.
1. Realty Income is a reliable dividend payer
There are dividend stocks, and then there's Realty Income. It markets itself as "The Monthly Dividend Company," and it has paid a monthly dividend consecutively for the past 658 months. That's more than 54 years of dividends, paid out on a monthly basis. That combination puts it in a league by itself.
It also has a history of raising the dividend quarterly rather than annually (the way most dividend-paying companies do). It has raised the dividend consecutively for the past 110 quarters (just over nine years).
Image source: Getty Images.
Driving this reliability is a solid operating model with a self-sustaining cycle. Realty Income is a real estate investment trust (REIT), and its core tenants are in retail businesses. These are established companies like Walmart, 7-Eleven, Dollar General,Chipotle, and Lowe's, which are stable and can pay the rent even under pressured circumstances like a global pandemic, for instance. Management says that 91% of its portfolio is resilient in economic downturns. It's highly concentrated in industries that sell essentials, with 10.3% of properties in grocery and 9.9% in convenience stores.
However, it has expanded into other industries and markets that diversify its risk further. Although 80% of properties are in retail, 14% are in industrial, and the remainder is in other spaces. While most of its properties are in the U.S., one of its top five tenants is in the U.K. In total, it owns 15,600 properties across 91 different industries leased to over 1,500 different clients throughout all 50 U.S. states, the U.K., and six other countries in Europe. No tenant accounts for more than 3.5% of the overall portfolio.
Realty Income typically sports a high occupancy rate that nears 100%. Its lowest rate in the past decade was 97.9% early in the pandemic, and today it stands at 98.2%.
2. Realty Income has the resources to keep growing
The company grows its business through two primary actions: buying properties and acquiring smaller REITs. Acquisitions add thousands of properties quickly, and the company has more than doubled its portfolio over the past few years.
It has an excellent future opportunity through its extensive capital resources. It operates in a market with a $14 trillion opportunity, and it already has $23 billion in sourced volume in just the 2025 first quarter. That's a large pipeline of potential new properties to grow the business and the dividend, and it gives it the option for high selectivity; it usually acquires less than 10% of sourced properties.
Despite pressure in the economy, Realty Income reported $1.06 per share in adjusted funds from operations (AFFO), up 3% from last year, and it reiterated its full-year outlook. The new focus on an expanded property set is also leading to better margins, in addition to reducing risk and protecting against tariffs, and management expects that to continue as it continues in this direction. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin has improved from 91% in 2011 to 95% today.
And as interest rates go down, it will be easier and cheaper for the company to fund new acquisitions and purchases. Combined with its all-weather business and more globally diversified portfolio, it's well-positioned to perform despite the new tariffs.
3. Realty Income's dividend yield is well above average at the moment
Realty Income's dividend yields 5.7% at the current price, more than 4 times the S&P 500 average. Over the past decade, the yield has averaged 4.5% (which is still incredible), but it's even higher these days because fears about the real estate market and still-elevated interest rates are pushing down the stock price. It has reported a 13.6% average annual total return since it went public in 1994.
That's a fabulous return that's stable and reliable, and you can expect it to keep going, making this an excellent choice for passive income investors.
Should you invest $1,000 in Realty Income right now?
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Jennifer Saibil has positions in Walmart. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Realty Income, and Walmart. The Motley Fool recommends Lowe's Companies and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
