1 Dividend Champion Stock Beating the Market in 2025

Key Points

• Realty Income stock has been under pressure in a poor real estate market, and it's been looking like a bargain.

• It works with the world's top retail chains, making it reliable for stability and growth.

• Realty Income pays a monthly dividend with a high yield.

• 10 stocks we like better than Realty Income ›

Top dividend stocks aren't always market beaters; the benefits of dividends are in their passive income. It's a little bit of a dance, with dividend yield usually working conversely with the potential gains for the stock. The higher the yield, the less likely you're looking at high-growth potential.

Realty Income (NYSE: O) is one of the best dividend stocks you can buy, with a high yield and an incredible track record. Even though it's still under pressure from a sour real estate market, it's beating the market this year -- even without its famous dividend. Let's see why.

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Oversold and undervalued

Realty Income is a real estate dividend trust (REIT), a classification of stocks that own and lease properties and pay out 90% of their earnings as dividends. Realty Income is one of the biggest REITs in the world, with more than 15,600 global properties.

It makes more money by purchasing more properties, often through acquiring smaller REITs, and creating long-term lease contracts. The model requires a long funding pipeline to buy properties and new properties to buy, and as you might imagine, it's more challenging to do that profitably and successfully when interest rates are high. That's led to market pessimism, and Realty Income stock is about 25% off of its all-time highs.

However, as interest rates have started to decline and the economy demonstrates resilience, the market is climbing, and investors are feeling more favorably disposed toward some of the best real estate stocks. Realty Income has been performing well despite the pressure, with adjusted funds from operations (AFFO) of $1.05 in the 2025 second quarter, a penny less than last year, but an increase in AFFO-per-share guidance for the full year.

Realty Income has been looking more like a bargain, and smart investors have been scooping up shares. Realty Income stock is now outpacing the market, with and without dividends included.

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A business model that works

Realty Income is a retail REIT, and it leases its properties to 1,600 different tenants in 91 different industries. It works primarily with well-known and established retail chains that are large and reliable, and it signs long-term leases that create a recurring revenue stream.

Although the focus on solid retailers that sell essentials is touted as an advantage, it has recently branched out to other industries, which offers its own advantages in diversification. It's also becoming more diversified by region. Its top three tenants are 7-Eleven, Dollar General and Walgreens, and grocery and convenience stores account for about 20% of paid leases. But other top-10 tenants include Life Time Group Holdings and Wynn Resorts, and U.K. supermarket chain Sainsbury's is No. 11.

There's plenty of opportunity to keep growing. Management has identified an $8.5 trillion market in leasable properties in its current markets and $14 trillion in an addressable market as it expands into new verticals like data centers.

You can't beat this dividend

Realty Income has been paying a dividend for more than 55 years, and it pays the dividend monthly. It raises it quarterly, and it's raised it for the past 111 quarters. That puts it in a league of its own, and it's on track to keep it up.

Often, dividend stocks that are that reliable don't have a high yield; the benefit is in the dependability and the track record. Realty Income's dividend yields 5.4% at today's price, an excellent yield that's more than 3 times higher than the S&P 500 average.

If interest rates come down and the real estate market improves, Realty Income will be in an even better position to deliver value for shareholders. There are bound to be ups and downs over many years, but long-term investors seeking an excellent dividend stock will find it with Realty Income.

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

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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.