Realty Income vs. EPR: Which Monthly Dividend Stock Shines in a High-Rate World?

In a world where interest rates remain elevated and economic uncertainty lingers, investors seeking reliable income often turn to real estate investment trusts (REITs). Two prominent names in this space—Realty Income (NYSE: O) and EPR Properties (NYSE: EPR)—offer monthly dividends, but their approaches to risk, growth, and valuation differ meaningfully. Here's how they stack up.

Dividend Yields: EPR Edges Out Realty Income

As of June 2025, EPR Properties leads with a 6.07% dividend yield, slightly higher than Realty Income's 5.65%. Both payouts are compelling compared to the S&P 500's meager 1.5%, but the gap highlights a trade-off: EPR's higher yield comes with greater sensitivity to economic cycles.

EPR's dividend, which rose 3.5% earlier this year, is supported by a 70% payout ratio relative to its adjusted funds from operations (FFO)—a conservative metric suggesting sustainability. Realty Income, meanwhile, maintains a 75% payout ratio, slightly less conservative but still prudent, underpinning its 660 consecutive monthly dividends since its founding.

Growth Prospects: Diversification vs. Experiential Focus

Realty Income's strength lies in its broad diversification, spanning 90 industries and 15,600 properties globally. This includes sectors like gaming, health/fitness, and logistics, which provide steady cash flows. The company targets low-to-mid single-digit annual growth in FFO per share, fueled by its $14 trillion global net lease market opportunity.

EPR, however, bets on experiential real estate—movie theaters, ski resorts, and attractions—where it commands 95%+ occupancy in key segments. Its $100+ billion addressable market in this niche supports 3–4% annual FFO growth, with $148 million allocated to new developments. Yet this focus on discretionary spending makes EPR more vulnerable to economic downturns.

Risk Profile: Stability vs. Volatility

Realty Income's investment-grade balance sheet—with $20.6 billion in liquidity and minimal leverage—provides a defensive moat. Its conservative financials have allowed it to avoid dividend cuts for decades, even during the pandemic.

EPR's balance sheet, while also investment-grade, lacks Realty Income's depth. Its recovery post-pandemic—stock up 41% year-over-year—reflects pent-up demand for leisure, but its reliance on experiential assets means it could falter if discretionary spending weakens.

Valuation: EPR Undervalued, Realty Income at Fair Value

On a forward price-to-FFO basis, EPR trades at 12.08x, a 23% discount to its pre-pandemic average and below its peers. Realty Income, at 13.41x, trades slightly above its one-year median but below the retail REIT industry average of 15.09x.

Analysts see EPR's valuation as a buying opportunity, with potential upside to $53.70 (a 22% gain from its June 2025 price). Realty Income's premium reflects its stability, but its $27.6 billion debt load poses risks in a high-rate environment.

The Bottom Line: Defensive Investors Should Favor Realty Income

While EPR's higher yield and growth projects make it an intriguing income play, Realty Income's proven resilience, diversified portfolio, and rock-solid balance sheet make it the safer bet in a volatile market. Its dividend reliability—no cuts in its history—is a rare commodity for investors prioritizing stability.

For those willing to accept cyclical risk, EPR's undervaluation and rebound in experiential demand offer upside. But in a high-rate world, Realty Income's defensive attributes—including its lower payout ratio and broader cash flow streams—position it as the best monthly dividend stock for conservative investors.

Investment Takeaway:
- Buy Realty Income (O) if you prioritize safety and steady income in an uncertain economy.
- Consider EPR (EPR) only if you're comfortable with cyclical risk and believe leisure spending will continue to rebound.

In either case, both REITs offer compelling monthly payouts, but the choice hinges on whether you want a fortress-like dividend provider or a higher-yielding, growth-oriented play.