Realty Income Reported Earnings Monday. Here's What Investors Need to Know.

There are a great many real estate investment trusts (REITs) available for investment on U.S. stock exchanges. Among this crowded pack, Realty Income (NYSE: O) is quite an outlier. Not only has it been plying its trade -- the company specializes in owning retail properties -- for decades, it has also distinguished itself with its monthly dividend payouts.

But did it distinguish itself in the third quarter? Let's burrow into the company's numbers, released after market close Monday, to come up with an answer.

The market shrugged at Realty Income's third-quarter figures

Realty Income's revenue in Q3 was slightly over $1.47 billion, which was up a comforting 10% from the same quarter of 2024. Net income under generally accepted accounting principles (GAAP) grew by a more robust 21% to almost $316 million, equating to $0.35 per share.

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The company handily beat the consensus analyst estimate for revenue, which was $1.46 billion. However, prognosticators tracking the stock were expecting slightly higher profits of $0.36 per share.

While net income is an important metric for REITs in determining the dividends they pay out, it isn't as accurate a profitability measure for them as funds from operations (FFO). After all, FFO strips out certain accounting items such as depreciation (always a big number for REITs) in order to provide a "truer" picture of how the operation is doing financially.

On that metric, then, Realty Income did fine during the quarter. Adjusted FFO headed north by 8% year over year to nearly $992 million, or $1.08 per share.

In after-market action following the earnings release on Monday, investors expressed mild disappointment despite the gains. The stock opened Tuesday down 0.7%, then sank by a further 2.8% in that trading session.

I'd imagine those declines had more to do with management's guidance than the REIT's trailing numbers, which to my mind were rather satisfying.

Realty Income tweaked several of its key estimates for full-year 2025. It's now guiding for net income per share of $1.27 to $1.29, down from its previous forecast range of $1.29 to $1.33. It also tightened its adjusted FFO guidance to a range of $4.25 to $4.27; the previous forecast was $4.24 to $4.28.

A giant at home, with a growing footprint abroad

Personally, I was impressed by Realty Income's third quarter. The company is the largest retail REIT on the scene, with a portfolio of 15,542 properties as of the end of September. Most of those are located within U.S. borders, but over the past few years, the company has established a foothold overseas in markets such as the U.K., Germany, and France.

When a REIT reaches such a mammoth size, it gets harder for it to post meaningful growth, but Realty Income continues to do so. In part, the gains are baked into its operational methods -- most of the company's leases include annual rent "escalators" (rent increases, to you and me), so to an extent, some of its growth is on autopilot.

Its success is compounded by the fact that a great many of Realty Income's top tenants are durably popular, recession-proof destinations for shoppers. Its No. 1 occupant is convenience store chain 7-Eleven, and discount retailer Dollar General is the runner-up. Other reliable and resilient tenants in the REIT's top 20 include CVS Pharmacy and logistics mainstay FedEx.

Realty Income's most recent occupancy rate was 98.7%, which says a lot about the desirability of its retail spaces and the satisfaction of those tenants.

I think most of them will continue to occupy the REIT's spaces, and it seems analysts would agree. For the current year, they're expecting a more than 7% rise in revenue to $5.41 billion. FFO projections aren't easy to come by, but net income -- which, again, is the key determinant of dividend payments -- should climb by almost 30%(!) to $1.40 per share, according to their collective estimate.

And that dividend is a thing of beauty. Not only does it get dispensed like clockwork 12 times a year (in fact, the company has trademarked its descriptor as "the monthly dividend company"), it's also generous. The yield currently stands at 5.6%, which is rich even by the standards of the high-yield REIT space.

To my mind, Realty Income is the largest and (arguably) most prominent retail REIT for a reason. It's an expert operator in its field, and it is a landlord that tenants tend to stick with for extended stretches of time. As such, it continues to look like a solid choice for any investor who wants to add an income-generating stock to their portfolio.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends CVS Health and FedEx. The Motley Fool has a disclosure policy.