The Ultimate Dividend Safeguards: Why Realty Income and Healthpeak Are Your 2025 REIT Champions

In a year where volatility is king, investors are scrambling for safety. That's why Realty Income (O) and Healthpeak Properties (DOC) are my top picks for 2025. These net lease REITs aren't just surviving—they're thriving in the face of economic uncertainty, offering steady dividends and rock-solid balance sheets. Let's dive into why these two are the gold standard for income investors.

Defensive Characteristics: Built to Outlast Any Storm

Long-Term Leases = Predictable Income
Realty Income's 15,600 properties, mostly freestanding retail stores, are leased under triple-net agreements, meaning tenants cover taxes, insurance, and maintenance. This structure insulates the company from operational costs and ensures stable cash flows. Meanwhile, Healthpeak's focus on healthcare facilities—including medical offices and life science labs—anchors its portfolio to a sector that's recession-resistant. The Affordable Care Act and an aging population ensure steady demand for healthcare services, making Healthpeak's leases a defensive bet.

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Strong Balance Sheets: Bulletproof Against Rate Hikes

Both REITs are debt-free warriors.
- Realty Income carries minimal leverage, with a debt-to-equity ratio of 0.4x, well below industry averages. Its AA credit rating and ample liquidity ($1.2B in undrawn credit lines) allow it to weather rising interest rates without scrambling for refinancing.
- Healthpeak, after its 2024 merger with Physicians Realty Trust, now boasts $6.8B in total assets, with a debt-to-EBITDA ratio of 5.8x—comfortably within investment-grade thresholds.

Undervalued at a 25-37% Discount to Fair Value

Morningstar's analysis highlights huge upside potential:
- Realty Income (O) trades at $56.25 vs. a $75 fair value estimate, a 25% discount.
- Healthpeak (DOC) is even cheaper at $17.33, or 37% below its $27.50 fair value.

This undervaluation isn't a typo. Both companies are priced for pessimism, but their dividend yields (5.69% for O, 7.01% for DOC) scream value.

Addressing the Bear Case: Rates and Sector Headwinds

Critics will argue: “Interest rates are rising! Retail is dead! Healthcare is overvalued!”

On Interest Rates:

• Realty Income's leases average 10–15 years, shielding it from short-term rate spikes. Over 80% of its debt is fixed-rate, so borrowing costs won't spike with Fed hikes.
• Healthpeak's portfolio has a weighted average lease term of 8.7 years, giving it time to adapt as rates stabilize.

On Retail:

Yes, retail is evolving—but Realty Income isn't in the mall business. Its single-tenant stores (think gas stations, pharmacies, and convenience retailers) are recession-proof, with tenants like 7-Eleven and Walgreens. These businesses thrive even as e-commerce grows.

On Healthcare:

Healthcare's structural tailwinds—like the ACA's 20M newly insured Americans and an aging population—are decades-long trends, not fads. Healthpeak's shift to life science assets (used for biotech and pharmaceuticals) further insulates it from cyclical swings.

The Bottom Line: Buy Now, Hold Forever

These are buy-and-hold champions.

• Realty Income (O): With its 5.69% yield and $75 fair value, even a partial reversion to price would mean a +33% gain. Its June 2025 forecast of a $93.10 close (vs. a May 2024 price of $55.14) suggests a 69% rise—a win for both income and growth.
• Healthpeak (DOC): At $17.33, it's a steal. A rebound to $27.50 (Morningstar's target) would deliver a +59% gain, plus its 7% yield.

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Action Items for 2025:
1. Dollar-cost average into both stocks using dividends to compound gains.
2. Lock in the yields: With bond yields at 4%, these REITs' payouts beat Treasuries handily.
3. Forget the noise: These REITs are priced for disaster but built for stability.

In a market obsessed with the next crash, Realty Income and Healthpeak are the anti-crash plays. Buy them now, and sleep like a rock.