Is It Too Late to Buy Realty Income Stock?
Key Points
Realty Income benefits from a stable and well-understood client base.
Investors should judge it for the cash it generates instead of net income.
A generous monthly dividend helps make it a desirable holding.
- 10 stocks we like better than Realty Income ›
After years of little movement, conditions have finally improved for shares of Realty Income (NYSE: O). Thanks to a recent surge in the stock price, it is trading at its highest point in almost three years.
Such a move can leave investors wondering whether it is too late to buy the stock. Fortunately, it looks like there's still time, and here's why it remains a long-term buy.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
Realty Income and its stock price
Realty Income is not widely known to average investors, but chances are, we have set foot in at least one of its buildings.
It owns more than 15,500 single-tenant, net-leased properties. This means that the tenant pays for maintenance, taxes, and insurance, which keeps cash flows steady. Also, it leases property to companies including Walmart, Wynn Resorts, and FedEx, which helps give it a stable client base.
Moreover, occupancy levels hover at almost 99%. For that reason, it is always working to acquire or develop more properties. Also, the recent cut in interest rates presumably makes more deals feasible, which bodes well for both the company and its shareholders.
Despite those attributes, a surface-level analysis might suggest that investors have missed the boat. Aside from the multiyear high in the stock price, it recently traded at a price-to-earnings ratio (P/E) of 57. For a slower-growing company such as Realty Income, many investors might hesitate to pay a valuation that is close to double the S&P 500 average of 30.
However, investors have to remember that Realty Income is a real estate investment trust (REIT), and so it's a real estate stock that must pay at least 90% of its net income in the form of dividends.
Net income includes deductions for mortgage interest, a key feature of real estate holdings. This renders net income less meaningful and tends to shift the focus to funds from operations (FFO), a measure of a REIT's free cash flow.
Its normalized FFO for 2025 was $4.27 per share, meaning it trades at less than 16 times normalized FFO. And that figure is well above the $3.24 per share in annual dividend costs, making its payout sustainable.
Realty Income offers a 4.8% dividend yield, far above the S&P 500's 1.1% average. Furthermore, its monthly payout has risen annually since 1994, meaning income investors should benefit from a much-needed inflation hedge.
Realty Income is a buy
In conclusion, it is not too late to buy Realty Income stock, and buying now could even mean buying early.
What Realty Income may lack in excitement, it more than makes up for in reliability. Its real estate portfolio is bolstered by a stable client base, which funds a generous and rising dividend.
Now, thanks to lower interest rates, more deals become attractive, creating a virtuous cycle that should increase the dividend and stock price over time. That and a low price-to-FFO ratio should give growth and income investors reason to buy more shares even as the stock price rises.
Should you buy stock in Realty Income right now?
Before you buy stock in Realty Income, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $534,008!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,073!*
Now, it’s worth noting Stock Advisor’s total average return is 949% — a market-crushing outperformance compared to 192% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of March 8, 2026.
Will Healy has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income and Walmart. The Motley Fool recommends FedEx. The Motley Fool has a disclosure policy.
Recommended Articles
