Jim Cramer Recommends This REIT Dividend Stock With 5.5% Yield

In a year marked by market turbulence, Jim Cramer has once again turned to dividend stalwarts as a refuge for investors seeking stability. Among his top recommendations for 2025 is realty income corporation (NYSE: O), a REIT offering a 5.5% dividend yield—a standout figure in a landscape where even 2-year U.S. Treasuries yield just 4.5%. Known as “The Monthly Dividend Company,” Realty Income has built a reputation for consistency, with 54 consecutive years of monthly dividend payments and 30 years of annual dividend hikes, cementing its status as a Dividend Aristocrat. But what makes this stock a must-watch in 2025? Let’s dive into the details.

The Power of Dividend Discipline

Realty Income’s dividend track record is unmatched in the REIT sector. Its 5.5% yield in 2025 isn’t just a number—it’s a product of disciplined cash flow management and a portfolio engineered for resilience. With a dividend payout ratio consistently below 80%, the company retains ample room to grow its payout while shielding investors from volatility. For context, the average REIT dividend yield in 2025 hovers around 3.5%, making Realty Income’s offering a rare high-yield opportunity.

Diversification at Scale

Realty Income’s portfolio isn’t just large—it’s strategically diversified. The company owns over 339 million square feet of real estate across eight countries, with tenants spanning retail, logistics, and emerging sectors like data storage. Key anchors include Walgreens, Dollar General, and 7-Eleven, which collectively account for 30% of its rental income. This mix insulates Realty Income from sector-specific downturns, as evidenced by its 7.2% stock gain in early 2025 while the S&P 500 fell 10%.

But Realty Income isn’t resting on its retail roots. The company is pivoting into high-growth areas like data centers and digital data management, which now contribute 36% of its revenue. This shift has positioned it to capitalize on the $8.5 trillion European real estate market and a global push toward digitization. By 2025, Realty Income aims to hit $7.3 billion in annual revenue, up from $4.5 billion in 2021—a 62% increase fueled by both organic growth and strategic acquisitions.

Resilience in a Volatile Market

Cramer’s endorsement hinges on Realty Income’s ability to thrive amid macroeconomic headwinds. While the broader market stumbled in early 2025, Realty Income’s stock rose 7.2%, and reinvested dividends boosted total returns to 9.3%. This outperformance is no accident. The company’s 6-7% annual internal cash flow growth (without acquisitions) and a focus on recurring revenue streams (64% from storage, 36% from services) create a “moat” against economic cycles.

Analysts also highlight its valuation: Realty Income trades at 16x 2023 funds from operations (FFO), a discount to its 10-year average of 18x. This affordability contrasts with overvalued peers like Simon Property Group (SPG), which trades at 20x FFO, or Gladstone Land (LAND), an agricultural REIT yielding just 4.8% with less diversification.

The Risks and the Reward

No investment is without risks. Realty Income’s rebound from pandemic lows—its stock surged 77% after a 2020 dip—has already priced in some optimism. Additionally, rising interest rates could pressure REIT valuations, though Realty Income’s low leverage ratio (35% debt-to-assets) offers a buffer.

Yet the rewards appear compelling. With a 5.5% yield and a track record of compounding wealth through dividends (its stock has returned 1,000% over 20 years), Realty Income is a rarity: a stock that pays handsomely and grows.

Conclusion: A REIT for All Seasons

In 2025, Realty Income stands out as a best-in-class dividend machine. Its 54-year dividend streak, 5.5% yield, and strategic pivot into high-growth sectors like data storage make it a rare blend of stability and innovation. While macro risks loom, the company’s diversified portfolio, disciplined management, and valuation advantages position it to deliver 9.3%+ total returns—even as the S&P 500 flounders.

For income-focused investors, Realty Income isn’t just a stock—it’s a blue-chip dividend powerhouse with global reach and a proven playbook for weathering storms. As Cramer might say, this is one REIT you don’t want to miss.