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The Smartest S&P 500 Dividend Stock to Buy With $1,000 Right Now

Source The Motley Fool

Key Points

Realty Income pays a higher yield than the 10-Year Treasury.
It has a wide moat, and it looks dirt cheap relative to its growth rates.
10 stocks we like better than Realty Income ›

The 10-Year Treasury recently surpassed 5% for the first time since 2007. That's bad news for most dividend stocks, since income-seeking investors will rotate toward those high-yielding bonds. Rising Treasury yields will also drive other fixed-income investments -- like corporate bonds and CDs -- to offer higher yields to stay competitive.

Therefore, it might seem like a terrible time to buy dividend stocks. However, there's one dividend stock in the S&P 500 (SNPINDEX: ^GSPC) that I'd still park $1,000 (or more) in: Realty Income (NYSE: O), one of the world's largest real estate investment trusts (REITs).

Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »

A woman makes a thumbs up sign while holding a piggy bank.

Image source: Getty Images.

Why is Realty Income worth buying?

As an equity REIT, Realty Income buys commercial properties, leases them to businesses, and distributes at least 90% of its taxable income to its investors through monthly dividends. It owns over 15,500 commercial properties, which it leases to roughly 1,800 clients in 92 industries. It mainly targets recession-resistant businesses -- including convenience stores, drugstores, and discount retailers -- and has maintained an occupancy rate above 96% since its 1994 IPO.

It pays a forward yield of 5.9%, making it more attractive than most fixed-income investments, and it's raised its payout 136 times since its public debut. For 2026, it expects its adjusted funds from operations (AFFO) to rise 4% to $4.44-$4.45 per share, which will easily cover its forward dividend rate of $3.26 per share. At $55, it trades at just 12 times that estimate. Therefore, I believe Realty Income will remain a safe way to earn some extra income in this messy market.

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 $384,839!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,385,657!*

Now, it’s worth noting Stock Advisor’s total average return is 936% — a market-crushing outperformance compared to 213% 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 September 24, 2026.

Leo Sun has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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