Is 2026 the Year to Buy Realty Income?

Investors attempting to live off the dividends their portfolios generate are typically looking for two things: a reliable dividend and a growing business. That's exactly what you'll get with Realty Income (NYSE: O). And you'll collect a 5.2% dividend yield along the way, more than four times what you'd earn from an S&P 500 (SNPINDEX: ^GSPC) index fund. Here's why 2026 could be the right time to buy Realty Income.

What does Realty Income do?

Realty Income is a retail-focused net lease real estate investment trust (REIT). A net lease requires the tenant to pay for most property-level operating costs. Although any single property is high risk, since there's only one tenant, the risk is fairly low across a large portfolio. Essentially, Realty Income avoids the expense and uncertainty of maintaining its properties. Realty Income is the largest net lease REIT, with a portfolio of more than 15,500 properties.

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Roughly 80% of the company's rents come from retail assets. That is a lot of concentration, but it is less worrisome than it appears. Single-tenant retail assets are very similar to each other and are relatively easy to buy, sell, and lease to a new tenant, if needed. That said, the rest of the portfolio is spread across industrial assets and other unique property types, such as casinos and data centers. That adds diversification to the mix, which is further augmented by the company's geographic reach, which includes the United States, Europe, and, just recently, an acquisition that will see Realty Income's entry into Mexico.

That portfolio is built atop an investment-grade-rated balance sheet. Add that fact to Realty Income being the sixth-largest global REIT, and you get easy access to capital markets. REITs tap the capital markets regularly for cash to fund their growth. Thus, Realty Income has an advantage over smaller peers because it tends to have a low cost of capital.

The dividend is the big story

All in, Realty Income has a strong business model. The proof of that comes from its 30-year streak of annual dividend increases. If you are trying to find a reliable dividend stock, this monthly pay net lease giant should be on your wish list, if not your buy list, noting its well-above-market yield.

However, the really exciting part of the story is what Realty Income is doing to ensure its dividend continues to grow for years to come. The next big move is building an asset management business geared toward institutional investors. This is a fee-generating business that builds on what Realty Income is already doing. It is a big development that is happening in 2026, and it should make Realty Income an even more attractive long-term buy for conservative dividend lovers.

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.