1 Top Dividend Stock to Buy Without Hesitation for a Lifetime of Passive Income

Realty Income (NYSE: O) has been a very reliable investment in its 30 years as a public company. The real estate investment trust (REIT) has delivered positive earnings growth in 29 of those 30 years. Meanwhile, it has increased its dividend every single year.

"Our ability to deliver reliable performance through varying market conditions remains a hallmark of our platform," stated CEO Sumit Roy on the REIT's first-quarter earnings conference call. It has strategically focused on building a more durable business over the years. Because of that, it's one dividend stock that investors can confidently buy and hold for a lifetime of passive income.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Building a more durable business

Realty Income started as a REIT focused on investing in freestanding net-lease retail properties in the U.S. That property type and lease structure tend to produce very stable rental income because the tenant covers all of a property's operating expenses, including routine maintenance, real estate taxes, and building insurance. As a result, retail REITs focused on single-tenant, net-lease real estate tend to be excellent dividend stocks. For example, NNN REIT has increased its dividend for 35 straight years, while Agree Realty has grown its payout at a 5.5% compound annual rate over the past decade.

Whereas most of its peers have chosen to stay focused on freestanding U.S. net-lease retail properties, Realty Income has instead "strategically diversified our business model across client types, asset classes, and geographies," stated Roy on the call. The company began diversifying its portfolio in 2011 when it acquired $70 million of industrial properties leased to FedEx. Today, it has investments across $9.7 billion of U.S. net-lease industrial properties. The REIT has also expanded internationally, first to the U.K. in 2019 and then to other European countries in 2021. It currently owns $9.6 billion of properties in the U.K. (including $4.8 billion of retail multitenant, net-lease assets) and another $2 billion in Europe (including $400 million of retail multitenant, net-lease assets). Realty Income has also expanded into gaming ($2 billion), data centers ($300 million), and credit investments ($1.7 billion).

The company's "diversification and quality of our portfolio, combined with our proven stability as an operator, position us to navigate potential external pressures effectively, as we have consistently done," stated Roy on the call. That's evident in the fact that it has delivered positive earnings growth in all but one year in its three decades as a public company.

Enhancing its ability to grow

Realty Income could have remained focused on the U.S. freestanding retail sectors like its peers. There's plenty of room for these REITs to coexist, given the massive size of the investment market (an estimated $2.6 trillion).

However, by diversifying its portfolio, Realty Income has lowered its risk profile while expanding its investment opportunity set. For example, the U.S. industrial net-lease real estate market is worth an estimated $2 trillion. Meanwhile, Europe has an estimated $8.5 trillion of real estate suitable for net leases. On top of that, the U.S. gaming and U.S. data center investment markets are worth $400 billion and $500 billion, respectively. Add it up, and that's a $14 trillion total addressable market opportunity for the REIT.

Realty Income's diversification enables it to focus its investment activity where it sees the most compelling opportunities. During the first quarter, that was in Europe. About 65% of its investment volume was in Europe, where it earned a higher initial cash yield of 7% on new investments (compared to 6.9% for acquisitions in the U.S.). Another notable investment during the quarter was a credit investment in the U.S. data center sector. It invested $200 million into a loan for a data center development project with an initial yield of 10.2%. In addition to that attractive yield, the company made the investment in hopes that "this will lead to the ultimate ownership or a path to ownership of these assets," commented Roy on the call.

By strategically diversifying its portfolio, Realty Income has reduced risk and enhanced its ability to grow its earnings and dividend in the future. Those features make it an even more appealing long-term investment.

Built to pay a growing dividend

Realty Income continues to be a very reliable dividend stock. The REIT has strategically built a more durable portfolio over the years, which positions it to continue generating stable income. Meanwhile, its diversification strategy has enhanced its ability to grow. These features help make it a dividend stock you can confidently buy and hold for a durable passive income stream that could last your lifetime.

Should you invest $1,000 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 $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $714,958!*

Now, it’s worth noting Stock Advisor’s total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of May 12, 2025

Matt DiLallo has positions in FedEx and Realty Income. The Motley Fool has positions in and recommends FedEx and Realty Income. The Motley Fool has a disclosure policy.