Should You Buy Realty Income Stock Before Aug. 5?
Key Points
Dividends were the primary source of returns for Realty Income shareholders over the last five years.
Revenue beat estimates in each of the last four quarters, but another critical metric did not perform as well.
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Realty Income (NYSE: O) is a favorite among dividend investors. Known as "The Monthly Dividend Company," it remains true to that moniker, delivering a payout every month since November 1994.
Amid that, investors may wonder whether they should buy the stock before Aug. 5, when it will deliver its earnings report for the second quarter of 2026. Investors could actually have a slight advantage if they buy before the report, and here's why.
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Investing in Realty Income
The more critical date for investors is probably July 31. This is because one needs to become a shareholder by that date to collect the dividend in August. The company recently declared its 135th dividend increase, and at $3.25 per share yearly, the dividend yield is 4.9%, far above the S&P 500 average of 1.1%.
That advantage is critical since the stock underperformed the market over the last five years. That made the dividend the primary source of returns for some shareholders.
However, that decline came primarily from the massive rise in the fed funds rate early in the decade. Since that rose from a base just above 0%, a comparable percentage gain in interest costs is unlikely to repeat.
Moreover, it could help to buy before the earnings announcement since stock gains made up most of the returns over the last year. That occurred as revenue beat estimates. It beat estimates only once on funds from operations (FFO) income, a more critical income measure for a real estate investment trust (REIT).
Data by YCharts.
While its P/E ratio of 54 may seem high, it earned $4.26 in FFO income over the last 12 months and sells at a price-to-FFO ratio of 15, arguably making the stock inexpensive.
Admittedly, anything can happen to the stock after it announces earnings. Still, with a low valuation, a high dividend yield, and a rising stock price, it could make sense to buy before the announcement.
Should you buy stock in Realty Income right now?
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Will Healy has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
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