Realty Income (O1.63%) stands as a compelling investment, particularly for those seeking consistent income and long-term growth, despite delivering returns often associated with high-growth tech stocks. Investors who acquired shares at the 1994 initial public offering (IPO) have witnessed an astounding total return exceeding 8,400%, factoring in the substantial dividends received over the past 31 years. This remarkable performance highlights the company’s resilience and strategic approach to the real estate investment trust (REIT) sector. Realty Income’s core business model centers around specializing in single-tenant commercial properties, boasting a portfolio of over 15,600 buildings leased to tenants through a net leasing arrangement. This arrangement provides Realty Income with predictable and stable cash flows, as tenants are responsible for covering maintenance, insurance, and property taxes. Furthermore, the company’s tenant roster is comprised of prominent, customer-facing businesses such as Home Depot, Dollar Tree, FedEx, and Wynn Resorts, which significantly reinforces the company’s stability and reduces risk.

Realty Income’s growth trajectory has been impressive across various economic conditions. While stock gains and dividends have driven a significant portion of the company's returns, it’s important to acknowledge that the stock has experienced a decline of approximately 25% from its pre-pandemic peak, largely due to elevated interest rates and associated investor concerns. However, the company’s addressable market represents a vast opportunity. Realty Income operates in the U.S. and seven European countries, yet it’s only captured a small fraction of the estimated $14 trillion global market. With over 56 years of operation, its revenue of $5.28 billion over the trailing 12 months underscores the potential for further expansion. This has spurred the company to actively pursue acquisitions, most notably the 2024 acquisition of Spirit Realty, which added over 2,000 additional properties. Despite higher interest rates than many investors would prefer, Realty Income’s impressive 98.5% occupancy rate suggests continued expansion is probable.

Realty Income’s Dividend – A Cornerstone of Investment Appeal Realty Income’s commitment to shareholder returns is a key differentiator. The company has consistently branded itself as "The Monthly Dividend Company," distributing cash to shareholders every month since 1994, with the payout increasing at least once per year since the beginning. As of now, investors receive more than $3.22 per share in annual payouts, translating to a dividend yield of 5.8%, more than quadruple the S&P 500’s average yield of approximately 1.3%. Moreover, Realty Income’s Funds From Operations (FFO) income for the 12 months ending in the first quarter of 2025 was $4.22, substantially exceeding its dividend obligations. This strong financial position indicates a high probability of continued payout increases, especially if business conditions remain relatively stable. The company has already increased its payout twice in 2025, further solidifying its commitment to shareholder returns.

Investing in Realty Income – A Strategic Choice Despite the substantial gains realized, Realty Income’s growth story is far from over. While higher interest rates present a challenge for REITs like Realty Income, and its stock performance during the 2020s may have disappointed growth-oriented investors, the company has demonstrated resilience and adaptability. The company’s expansive addressable market, coupled with its generous, stable, and likely-to-increase dividend, makes Realty Income a compelling investment option for those seeking a high cash return and the potential for long-term appreciation. The company’s continued success hinges on its ability to navigate economic fluctuations and maintain its operational efficiency, but its fundamentals suggest a promising future.