Realty Income's Path to $70 Per Share: Is Now the Time to Buy for Long-Term Income Growth?

For income-focused investors, Realty Income Corporation (O) has long been a cornerstone of stability and growth. Known as “The Monthly Dividend Company,” O has delivered 662 consecutive monthly dividend payments and 111 straight quarterly increases. As the stock approaches $60 per share, the question arises: Is now the time to buy for long-term income growth? Let's dissect the company's historical dividend trajectory, cash flow resilience, and valuation dynamics to determine its potential to reach $70.

Dividend Growth: A Legacy of Reliability

Realty Income's dividend history is a masterclass in consistency. Over the past decade, the company has averaged a 3.61% annual dividend growth rate, with a 5-year average of 2.93%. These figures may seem modest compared to high-growth tech stocks, but they reflect a disciplined approach to capital preservation and shareholder returns.

What sets O apart is its 25-year streak of dividend increases, a feat achieved through economic cycles, interest rate fluctuations, and sector-specific challenges. For example, in the past 12 months alone, the dividend grew by 3.21%, demonstrating adaptability in a slowing transaction market. This consistency is critical for retirees and income investors seeking predictable, compounding returns.

Cash Flow Stability: High-Quality Tenants and Long-Term Leases

Realty Income's net lease model is a fortress of stability. With 15,600+ properties across the U.S., U.K., and seven European countries, the company's portfolio is diversified by geography, sector, and tenant credit quality. Key metrics include:
- 98.6% occupancy as of Q2 2025, with 103.4% rent recapture on re-leased properties.
- 90% of rent derived from non-discretionary, low-price-point, or service-oriented tenants (e.g., grocery stores, pharmacies, dollar stores).
- 30% of cash income from investment-grade-rated tenants, reducing default risk.

The weighted average lease term of nine years ensures long-term visibility, while tenants covering property expenses (e.g., maintenance, insurance) insulate O from operational volatility. Recent investments in Europe—76% of Q2 2025 acquisitions—further diversify risk and tap into high-yield opportunities.

Valuation: A Premium for Predictability

At $59.58 per share as of August 21, 2025, Realty Income trades at a P/E ratio of 57.84, 9% above its 10-year average of 52.9. While this premium may deter some, it's justified by the company's P/FFO ratio of ~15, a metric tailored for REITs. This valuation is in line with historical averages and becomes more compelling in a potential rate-cutting environment, where dividend-paying stocks often outperform.

Realty Income's updated 2025 guidance reinforces its value proposition:
- AFFO per share of $4.24–$4.28 (up from $4.22–$4.28 previously).
- $5.1 billion in liquidity, including $3.9 billion in credit facility availability.
- $1.2 billion in Q2 investments at a 7.2% initial cash yield, with 76% in Europe.

The company's ability to raise capital at favorable terms (e.g., €650 million in 3.375% notes due 2031) underscores its financial flexibility. With a dividend payout ratio of 76.8% of AFFO, there's ample room for growth without overleveraging.

Is Now the Time to Buy?

Realty Income's valuation is not a bargain, but its combination of dividend reliability, cash flow durability, and disciplined capital allocation makes it a compelling long-term hold. The stock's path to $70 hinges on three factors:
1. Continued dividend growth (targeting 3–4% annual increases).
2. Expansion of AFFO through strategic investments in Europe and U.S. industrial sectors.
3. A favorable interest rate environment that boosts REIT valuations.

For investors prioritizing income over speculation, O's current valuation offers a risk-adjusted entry point. While the P/E ratio is elevated, the company's $5.1 billion liquidity, 98.6% occupancy, and 30% investment-grade tenant exposure provide a margin of safety.

Conclusion: A Buy for the Long-Term

Realty Income's journey to $70 per share is not a sprint but a marathon. The company's 25-year dividend streak, 9-year average lease terms, and global diversification position it to weather macroeconomic headwinds. At ~15x FFO and with a 5.4% yield, O offers a balance of income and growth that's rare in today's market.

For those seeking a core holding in their dividend portfolio, now is the time to buy—provided you're investing with a 5–10 year horizon. The path to $70 may take patience, but the destination is well within reach for a company that's mastered the art of compounding.