4 Reasons to Buy Realty Income Stock Like There's No Tomorrow

Key Points

• Realty Income's juicy and growing dividend is a key reason to buy the stock.

• Its stability and growth prospects make the stock even more attractive.

• An aging population will need sources of reliable passive income, which Realty Income can offer.

• These 10 stocks could mint the next wave of millionaires ›

What do you call a stock that has greatly underperformed the S&P 500 (SNPINDEX: ^GSPC) over the past five years? In many cases, the appropriate word would probably be "loser." However, in Realty Income's (NYSE: O) case, I think the best answer for many investors is "a great opportunity."

The future for this top real estate investment trust (REIT) is brighter than its recent past, in my opinion. Here are four reasons to buy Realty Income stock like there's no tomorrow.

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1. A stellar dividend

Realty Income's total return has been and will continue to be much better than its share price growth. That's because the company offers a stellar monthly dividend. Its forward dividend yield currently hovers around 5.6%.

Even better, Realty Income boasts an outstanding dividend track record. The REIT recently paid its 661st consecutive monthly dividend. It has also increased the dividend for 30 consecutive years. We're not talking about skimpy dividend hikes, either. Realty Income has increased its dividend payout by a compound annual growth rate of 4.2% since listing its shares on the New York Stock Exchange in 1994.

Investors don't have to worry that Realty Income's dividend streak will screech to a halt. The company expects to generate adjusted funds from operations (AFFO) in 2025 of between $4.24 and $4.28 per share. That's more than enough to cover its annualized dividend payout of roughly $3.23 per share.

2. Reassuring stability

Are you worried about what's in store for the stock market over the near term? Realty Income offers reassuring stability to nervous investors.

The REIT's portfolio is well-diversified, with 1,630 clients representing 91 industries. Roughly 91% of Realty Income's total rent is insulated from e-commerce pressures and/or largely resilient to economic downturns. This is primarily due to many of the company's clients leading in industries that are non-discretionary and service-oriented.

Realty Income's triple-net leases are typically long, which gives it consistent, recurring revenue. Its expenses are also low: Clients are responsible for insurance, maintenance, property taxes, and utilities.

Impressively, the company has delivered 29 consecutive years of positive total operational returns (the sum of annual AFFO per share growth and dividend yield). This makes the stock much less volatile than most of its peers in the S&P 500.

3. Tremendous growth prospects

Realty Income also has tremendous growth prospects. Its total addressable market in the U.S. is roughly $5.5 trillion. Within the U.S., freestanding retail -- the foundation of Realty Income's business -- continues to have plenty of growth potential. Industrial properties are another key area for growth, along with data centers and gaming.

However, the REIT has an even greater opportunity in Europe, where the total addressable market is around $8.5 trillion. To add icing to the cake, Realty Income faces only one major rival in the European market.

Image source: Getty Images.

4. An aging global population

You might be surprised to see an aging global population as a reason to buy Realty Income stock. Why is it on the list? Older individuals will need passive income during their retirement that they can count on to grow at least as fast as inflation.

More than 21% of the U.S. population will be age 65 or over by 2040. The average life expectancy is projected to increase as well. Social Security won't be enough to meet these seniors' retirement income needs.

The Investment Company Institute estimated that retirement assets in the U.S. totaled $43.4 trillion at the end of the first quarter of 2025. This amount is likely to grow in the coming years. As Realty Income grows and continues to pay juicy dividends, its stock should become an increasingly popular investment alternative.

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Keith Speights has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.