Realty Income: Buy, Hold, or Avoid?

The article discusses Realty Income, a dividend investing option with a steady track record. It encourages readers to consider three cases: buy, hold, or avoid. The author suggests that while Realty Income is a reliable choice, there may not be much to discuss due to its consistency. However, the author invites readers to consider whether Realty Income is worth reading about and whether it is a good investment option for them.

Realty Income (O) is a prominent real estate investment trust (REIT) known for its consistent dividend payments and a stable portfolio of revenue-generating properties. As of July 2025, Realty Income stands out as a reliable dividend investment option, offering a 5.7% dividend yield and a history of increasing dividends for over 30 consecutive years [1]. This article explores the potential of Realty Income as a long-term investment, considering three key aspects: buy, hold, or avoid.

Buy, Hold, or Avoid: Realty Income

Buy: A Reliable Dividend Stream
Investors considering Realty Income should weigh its potential to generate a steady income stream. Realty Income's portfolio includes approximately 15,600 properties, with a significant portion of its revenue coming from retail tenants. The company's business model, which relies on net lease agreements with long-term tenants, ensures a stable income flow [1]. Over the past three decades, Realty Income has outperformed the S&P 500 index, demonstrating its ability to generate strong returns [2].

Hold: Long-Term Growth Potential
While Realty Income is not a high-growth stock, it offers substantial long-term growth potential. The company's portfolio is diversified across various sectors, including retail, industrial, gaming, and medical properties. The net lease real estate market in the United States is estimated to be about $5.4 trillion, with only about $215 billion owned by public REITs. This indicates ample room for growth, especially in emerging verticals like gaming properties, data centers, and medical facilities [1]. Additionally, Realty Income's expansion into the European market, where the net lease real estate market is even larger at $8.5 trillion, further supports its long-term growth prospects [1].

Avoid: Market Volatility and Interest Rate Headwinds
Investors should be cautious about market volatility and interest rate headwinds, which can negatively impact REITs like Realty Income. The company has underperformed the S&P 500 in recent years due to interest rate headwinds, but its long-term track record remains robust. As interest rates fluctuate, investors should monitor Realty Income's performance and adjust their investment strategies accordingly [1]. Furthermore, while Realty Income's dividend yield is historically high, it is essential to consider the stock's price volatility and its potential impact on overall portfolio performance.

Conclusion
Realty Income presents a compelling case for investors seeking a reliable dividend investment option. With a strong track record of consistent dividend growth and a diversified portfolio, Realty Income offers a steady income stream and long-term growth potential. However, investors should be mindful of market volatility and interest rate headwinds. Ultimately, the decision to buy, hold, or avoid Realty Income depends on individual financial goals and risk tolerance.

References:
[1] https://www.fool.com/investing/2025/07/24/could-buying-realty-income-stock-today-set-you-up/
[2] https://finance.yahoo.com/news/could-investing-10-000-realty-225000124.html