Could Buying This Ultra-High-Yield Dividend Stock Today Set You Up for Life?

Two of the most accessible ways to make a lot of money are investing in stocks and investing in real estate. But what if you combined the two?

Realty Income (NYSE: O) provides an easy way to do both. The company ranks as the seventh-largest global real estate investment trust (REIT). It offers an exceptional forward dividend yield of 5.67%. Could buying this ultra-high-yield dividend stock today set you up for life?

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Why invest in Realty Income?

Realty Income's dividend is one of the best reasons to invest in the stock. The high yield provides a nice head start for delivering strong total returns. It also helps that the REIT has increased its dividend for 30 consecutive years. We're not talking about puny dividend hikes, either: Realty Income's dividend has increased by a compound annual growth rate of 4.3%.

Don't think that this stock is only attractive to income investors, though. Realty Income's compounded annual return since its listing on the New York Stock Exchange in 1994 is an impressive 13.6%. An initial investment of $10,000 would be worth roughly $865,000 today if you reinvested dividends along the way.

Realty Income's stability is another huge plus. The company has delivered positive operational returns for 29 years. Its balance sheet is rock solid. The stock has a low beta value of 0.5 versus the S&P 500, reflecting its relatively low volatility.

This stability is largely due to the REIT's highly diversified property portfolio. Realty Income owns 15,627 properties leased to 1,598 clients representing 91 industries. Its tenants include many of the world's most well-known businesses, such as Dollar General, FedEx, Home Depot, and Walmart. No client makes up more than 3.4% of the company's total annualized based rent.

Looking ahead

Will Realty Income be able to continue succeeding in the future as it has in the past? I think so. The REIT has a huge global net lease addressable market of around $14 trillion. Realty Income's track record and reputation make it attractive to prospective tenants.

The company should have especially good growth opportunities in Europe. The competition there is limited. In the U.S., Realty Income competes against 12 peers. In Europe, though, it faces only two key rivals.

What if the economy weakens? Realty Income's business should hold up well. The company estimates that around 91% of the REIT's total rent is resilient during periods of economic downturns. Importantly, roughly 73% of its clients operate non-discretionary, low-price-point, or service-oriented businesses.

I also think it's worth noting that Realty Income has been able to deliver consistent financial performance when interest rates were high and when they were low. The company has chugged along through the dot-com bubble burst, the Great Recession, the COVID-19 pandemic, and the regional banking crisis of 2023.

Answering our question

Let's return to our original question: Could buying Realty Income stock today set you up for life? The answer is... yes.

Of course, there's no guarantee that Realty Income (or any other stock, for that matter) will be able to make you a ton of money. However, the chances that this REIT could generate significant returns for investors over the long run appear to be quite good, in my opinion.

I think that Realty Income should be able to deliver double-digit percentage total returns over the next decade and beyond, thanks to its juicy dividend and solid growth prospects. Although the company isn't completely immune to macroeconomic headwinds, its business is nonetheless highly resilient. Realty Income ranks as one of the best ultra-high-yield dividend stocks on the market for income investors and is a solid long-term pick for other investors, too.

Should you invest $1,000 in Realty Income right now?

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Keith Speights has positions in Realty Income. The Motley Fool has positions in and recommends FedEx, Home Depot, Realty Income, and Walmart. The Motley Fool has a disclosure policy.