Generating $100 in Monthly Passive Income from Getty Realty (GTY): Is It a Sustainable Play or a High-Risk Gamble?

Investors seeking passive income often turn to high-yield real estate investment trusts (REITs) like Getty Realty (GTY) for their combination of dividends and capital appreciation. With a current dividend yield of 6.82% as of August 2025, GTY appears to be a compelling option for those aiming to generate $100/month in income. But is this yield sustainable, or does it mask risks that could undermine long-term returns? Let's dissect the numbers, compare GTY to its peers, and evaluate whether this REIT is a reliable income generator or a precarious bet.

Dividend Sustainability: A Double-Edged Sword

Getty Realty's dividend has grown steadily since 1998, with quarterly payouts rising from $0.37 in 2020 to $0.47 in 2025. This 27% increase over five years reflects management's commitment to shareholder returns. However, the company's payout ratio of 153.7%—significantly higher than the REIT sector average of 163.4%—raises red flags. While this metric suggests strong earnings coverage, it also means a large portion of cash flow is allocated to dividends, leaving limited room for reinvestment in growth or navigating economic downturns.

For context, peers like CrossAmerica Partners LP (CAPL) have an even higher payout ratio (262.5%), while Global Partners LP (GLP) is more conservative at 92%. GTY's position is relatively balanced but still leans toward the aggressive end of the spectrum. The company's cash payout ratio of 79.7% is healthier, indicating that cash flow can cover dividends without relying on accounting adjustments. Still, a 15.23% decline in total dividends paid over the past year—driven by share count fluctuations and market dynamics—signals potential fragility.

Risk-Adjusted Returns: A Conservative Balance Sheet, But No Guarantees

Getty's financial health appears robust on paper. Its net debt-to-EBITDA ratio of 5.2x is well below the REIT sector average of 6.5x, and it has no debt maturities until 2028. The company's liquidity position is strong, with $400 million in available funds, including $150 million in unsettled forward equity. These metrics suggest a REIT that can weather interest rate volatility and fund new investments.

However, the 99.7% occupancy rate and 99.9% rent collection rate—while impressive—mask underlying vulnerabilities. Getty's portfolio is heavily concentrated in convenience stores and auto service centers, sectors that are less discretionary but still sensitive to economic cycles. For example, during the 2020 pandemic, similar REITs like EPR Properties (EPR) saw dividend suspensions due to tenant closures. While Getty's tenants are generally investment-grade, a prolonged recession could strain even the most stable operators.

The $100/Month Math: Feasibility and Caveats

To generate $100/month in passive income, an investor would need an annual dividend of $1,200. At GTY's current yield of 6.68%, this requires a $18,182 investment. With a stock price of $28.24, this equates to approximately 643 shares. The calculation assumes the dividend remains at $0.47 per share quarterly and the stock price holds steady.

But here's the catch: dividend growth has stalled. From 2020 to 2025, the dividend increased by 27%, but the most recent raise (from $0.45 to $0.47) was only 4.4%. Analysts project a future yield of 7.3% over the next three years, but this assumes continued earnings growth and stable share prices. If the stock price declines further—driven by rising interest rates or sector-specific headwinds—the required investment to maintain $100/month could rise sharply.

Comparing GTY to High-Yield REIT Peers

Getty's risk profile is more favorable than many high-yield REITs. For instance:
- Realty Income (O) offers a 5.6% yield with a payout ratio of 80% and a BBB+ credit rating.
- Agree Realty (ADC), with a 4.3% yield, focuses on essential retail tenants and maintains a conservative leverage strategy.
- Healthpeak Properties (DOC), now a healthcare REIT, transitioned to monthly dividends and boasts a 7.2% yield, though its tenant base is more specialized.

GTY's 6.82% yield outperforms these peers, but its higher payout ratio and exposure to a narrower tenant base make it a riskier proposition. Investors must weigh the allure of a high yield against the potential for volatility.

Conclusion: A High-Yield Option with Caveats

Getty Realty's dividend yield and financial flexibility make it an attractive candidate for income-focused investors. Its conservative leverage, strong tenant coverage, and focus on non-discretionary retail sectors provide a buffer against economic shocks. However, the high payout ratio and recent stagnation in dividend growth underscore the need for caution.

For those willing to accept the risks, GTY can be a viable path to $100/month in passive income—provided the company maintains its current trajectory. But this strategy should be part of a diversified portfolio, not a sole reliance. Investors should monitor key metrics like occupancy rates, capital deployment, and interest rate trends to ensure their income stream remains resilient.

In the end, Getty Realty is neither a guaranteed windfall nor a reckless gamble. It's a high-yield REIT with strengths and weaknesses that demand careful scrutiny. For disciplined investors who prioritize income over growth, it could be a valuable addition—but not without a clear understanding of the risks.