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

I'm a hardcore dividend investor, with a penchant for boring high-yield stocks. Realty Income (NYSE: O) is right at home in my portfolio. There are three reasons why you might want to add this giant net lease real estate investment trust (REIT) to your portfolio, too.

1. Realty Income is an industry leader

With a market cap of $52 billion, Realty Income is one of the largest REITs in the world. It is multiple times the size of its next closest competitor. And it is the bellwether name in the net lease segment of the broader REIT sector. (A net lease requires the tenant to pay for most property-level operating costs.)

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However, Realty Income's scale is important to grasp. It owns over 15,500 single-tenant properties, roughly 80% of which are retail-focused. No single property is going to have a material impact on the giant REIT's business. Moreover, retail assets are fairly easy to buy, sell, and release as needed. So even if there were a problem, it could be easily solved.

There would also be ample room for that solution to take shape. That's because the company has an investment-grade rated balance sheet. That fact, combined with its size, allows Realty Income easy access to the capital markets. That means it should be able to raise cash quickly if it were to encounter a problem, but also that it has the capability to easily fund future growth.

Being an industry giant is a significant advantage for Realty Income, particularly if you prefer boring dividend stocks, as I do.

2. The proof is in Realty Income's dividend pudding

But just how reliable is Realty Income as a dividend stock? It has increased its dividend annually for three decades, and counting. Within that streak, it has hiked the quarterly payout 112 times, and counting. In fact, the company trademarked the nickname "The Monthly Dividend Company" to highlight how highly it holds dividend reliability.

In the third quarter of 2025, the adjusted funds from operations (FFO) payout ratio was roughly 75%. For an industrial company, that might be a little high, but Realty Income is a REIT, and its net lease focus means it doesn't have huge operating costs. All in, the dividends are well covered.

There is one caveat here, however. The dividend has grown slowly over time, with a roughly 4.2% annualized growth rate over the past 30 years. Still, given the current 5.7% dividend yield, that's probably not going to bother income lovers like me. For reference, the S&P 500's (SNPINDEX: ^GSPC) yield is a tiny 1.1% right now.

3. Realty Income is preparing for the future

Being a slow-growth industry giant is OK, but the risk is that Realty Income gets so large that it basically turns into a no-growth business. That's not an unreasonable concern. However, I'm not too worried about that issue because management has been actively looking to add new growth levers to the business.

For example, it was once focused entirely on North America. Today, it has operations in Europe, where the net lease structure is still fairly new. It is also large enough to act as an industry consolidator, with the potential for acquisitions of entire companies to offer an attractive growth catalyst. It is also large enough to extend its reach into new areas, such as casinos and data centers.

Most recently, Realty Income has been developing an asset management business focused on institutional investors. This is a fee-generating business that leverages the company's existing infrastructure and scale. With this kind of innovation, I'm confident that Realty Income will be able to create even more ways to support its long-term growth.

Realty Income is a foundational dividend investment

To go back to the beginning, Realty Income is a boring stock with a high yield. However, it is a reliable business, and management has ensured it has ample growth opportunities ahead. If you are looking for a foundational dividend investment for your income portfolio, you need to do a deep dive on Realty Income today.

Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.