Analyzing Realty Income Corporation (O)

Welcome to the fifth installment of my portfolio series, where I analyze all 31 stocks currently in my personal portfolio. Today, we’ll be taking a detailed look at Realty Income Corporation, ticker symbol O.

My Holdings and Dividends

Logging into my Vanguard account, where I manage all my dividend investing, I currently own 430 shares of Realty Income. The stock pays monthly dividends, with the most recent payment being 25.5 cents per share. With my current holdings, I receive approximately $109.75 every month in dividends from Realty Income.

About Realty Income Corporation

For more than 50 years, Realty Income has been on a mission to provide stockholders with dependable monthly income and favorable long-term risk-adjusted returns. Realty Income is a real estate investment trust (REIT) that focuses on acquiring freestanding, single-tenant commercial properties leased to high-quality tenants under long-term lease agreements, typically in excess of 10 years. As a triple net lease REIT, Realty Income passes on the responsibility of paying taxes, maintenance, insurance, and other expenses to the tenants of their properties.

Founded in 1969, Realty Income launched their IPO on the New York Stock Exchange in 1994. Realty Income has been my favorite equity REIT for many years. Although it is not the highest-yielding equity REIT I own, its solid performance is the primary reason I have made a substantial investment in it.

Historical Performance and Dividend Growth

According to their website, Realty Income has achieved a compound annual total return of 14.6% since being listed in 1994. They have also experienced a 4.4% compound annual dividend growth rate over the same period. Realty Income has declared 634 consecutive monthly dividends and increased their dividend distributions for 102 consecutive quarters, making them a dividend aristocrat. This achievement signifies that the company has grown its dividends for at least 25 consecutive years.

Realty Income is one of only a handful of companies to reach this milestone. Other notable dividend aristocrats in the REIT sector include Essex Property Trust (ESS) with 28 years of dividend growth, Federal Realty Trust (FRT) with 55 years, National Retail Properties (NNN) with 32 years, and WP Carey, which is on the verge of becoming a dividend aristocrat. While all these companies are excellent dividend stocks, Realty Income is the only one that pays monthly dividends and has a cult-like following among dividend investors, myself included.

Business Model and Market Position

Realty Income’s business model is designed to withstand various economic conditions. Their top five industries include grocery stores, convenience stores, dollar stores like Dollar General, quick-service restaurants, and drug stores. These are businesses that people will continue to need regardless of economic downturns, making Realty Income’s portfolio relatively recession-resistant. Their largest tenants include Dollar General, CVS, Walmart, and 7-Eleven. Although they do hold some movie theaters, which are less desirable, Realty Income has been reducing the percentage of such properties in their portfolio over the past few years.

In recent years, Realty Income has expanded into new areas to fuel growth. In 2019, they began expanding their portfolio across Europe, investing $6.8 billion in acquiring properties overseas. Today, their European portfolio consists of 271 real estate properties, with the UK making up approximately 9.5% of their overall portfolio. Similar to their strategy in the U.S., Realty Income has focused on grocery and home improvement stores in Europe, among other sectors.

Recent Acquisitions and Strategic Moves

In early 2022, Realty Income announced the acquisition of the Encore Boston Harbor Resort and Casino for $1.7 billion under a long-term net lease agreement with Wynn Resorts. This holding alone now constitutes 2.9% of Realty Income’s overall portfolio. This move into the gaming industry was surprising to some, but Realty Income viewed it as a strategic expansion into new sectors.

Another significant move was the acquisition of VEREIT and its subsequent spin-off of their office property portfolio into a new company called Orion Office REIT. If you held shares of Realty Income during this time, you would have received shares of Orion Office REIT. While Orion has struggled since its IPO, Realty Income’s decision to spin off the office properties has proven to be wise, allowing them to focus on more stable and growth-oriented assets.

Strategic Partnerships and New Ventures

More recently, Realty Income has formed an alliance with Plenty, a company that owns vertical farms. Realty Income announced an agreement to fund up to $1 billion worth of property development for Plenty, which is considered a leader in the vertical farming sector. Vertical farming allows for the cultivation of various crops using a fraction of the land and water required by traditional farming methods. Additionally, these farms can operate year-round without pesticides, making them an attractive investment opportunity.

Realty Income is also focusing on consumer-centric medical real estate, including properties like dentist offices, drug stores, pediatric care facilities, and eye care centers. The aging U.S. population, expected to grow significantly by 2030, will likely increase demand for healthcare services, making these properties valuable additions to Realty Income’s portfolio.

Debt Management and Financial Stability

During periods of high interest rates, managing debt is crucial for REITs. Realty Income has effectively managed its debt, with no significant amounts reaching maturity in the near term. The bulk of their debt matures in 2026, by which time the economic environment is expected to be more favorable. Additionally, 85% of their debt is fixed-rate, insulating them from the current high interest rates.

Realty Income’s ability to withstand economic downturns without cutting dividends speaks to their robust business model and prudent financial management. Their size and track record make them a reliable investment that provides both income and dividend growth.


Realty Income Corporation has proven itself to be a resilient and dependable investment over the years. Despite offering a lower yield compared to some other REITs, its dividend growth and solid performance make it a cornerstone of my portfolio. Their strategic expansions, including ventures into Europe, the gaming industry, and vertical farming, demonstrate their commitment to growth and diversification.

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