Key Points
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Realty Income is one of the few REITs that pays monthly dividends.
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Its diversification, high occupancy rates, and stable growth make it a solid investment.
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Realty Income (NYSE: O), one of the world’s largest real estate investment trusts (REITs), pays monthly dividends instead of quarterly ones. It’s raised its payout 136 times since its 1994 IPO, and its current forward yield of 5.5% easily beats the 10-year Treasury’s 4.8%.
I initially invested in Realty Income in early 2024, and that position now accounts for 4.2% of my portfolio. I’d still be comfortable owning it for a lifetime of income for three simple reasons.
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1. Its scale and diversification
As an equity REIT, Realty Income buys commercial properties, rents them out, and splits the income with its investors. It must distribute at least 90% of its taxable income as dividends to maintain a lower tax rate.
To spread out its risk, Realty Income directly owns or holds an interest in 15,536 properties across the U.S. and Europe. It rents its properties to 1,842 clients across 96 industries, and it primarily targets recession-resistant tenants, such as discount retailers, drugstores, and convenience stores. Its top tenants include Dollar General, Dollar Tree, 7-Eleven, and Walgreens.
2. Its high occupancy rates
Some of Realty Income’s tenants have reduced their brick-and-mortar footprints in recent years, but its stronger tenants are offsetting that pressure with new store openings. It’s also attracting new tenants to replace those that are departing.
That’s why its occupancy rate — which came in at 98.8% in the third quarter of 2026 — has never dipped below 96% since its IPO. That’s pretty impressive, considering the U.S. has endured three official recessions (the dot-com crash, the Great Recession, and the COVID-19 crash) and four bear markets during those 32 years. It’s generated a total return of 9,710% since its IPO.
3. Its stable earnings growth and comfortable payout ratio
REITs measure their profit growth with their adjusted funds from operations (AFFO) per share rather than their earnings per share (EPS). From 2020 to 2025, Realty Income’s AFFO per share rose from $3.39 to $4.28, while its dividends per share grew from $2.79 to $3.23.
For 2026, it expects its AFFO per share to rise to $4.45-$4.46, easily covering its forward dividend rate of $3.26 per share. At $59, it still looks like a bargain at 13 times this year’s AFFO per share — and it will remain an attractive safe-haven stock in this choppy market.
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Leo Sun has positions in Realty Income. The Motley Fool has positions in and recommends Dollar General and Realty Income. The Motley Fool has a disclosure policy.
