| Metric | Value | YoY Growth | Assessment |
|---|---|---|---|
| Dividend Yield | 5.82% | +0.4% | Attractive |
| Occupancy Rate | 98.9% | -0.1% | Stable |
| AFFO Payout Ratio | 74.2% | 0.0% | Safe |
| Credit Rating | A- (S&P) | - | Investment Grade |
1. The Triple-Net Lease Advantage
Realty Income operates on a Triple-Net Lease (NNN) structure. This means the tenant is responsible for property taxes, insurance, and maintenance costs.
This model protects the company from inflation in operating costs, ensuring that gross revenue flows efficiently down to the bottom line (AFFO) to fund dividends.
🏆 Dividend Aristocrat Status
Realty Income has declared 650+ consecutive monthly dividends and increased the dividend over 120 times since its public listing. It is the gold standard for reliability in the REIT sector.
2. FFO vs. Net Income
For REITs, Net Income is a misleading metric due to depreciation. Investors must focus on FFO (Funds From Operations) and AFFO (Adjusted FFO).
Currently, Realty Income trades at approximately 13x AFFO, which is below its historical average of 17x. This suggests the stock is currently undervalued relative to its cash flow generation capability.
3. Risks & 2026 Outlook
The primary risk is interest rates. As rates remain elevated, the cost of debt for acquisitions increases. However, with an A- credit rating, Realty Income has a lower cost of capital than its competitors, allowing it to acquire distressed assets accretively.