Realty Income Corp (O) (2024)

Disciplined Acquisition Strategy Drives Growth for Realty Income

Realty Income is the largest triple-net REIT in the United States, with over 15,400 properties that mainly house retail tenants. The company describes itself as "The Monthly Dividend Company," and its line of business and operating metrics make its dividend one of the most stable sources of income for investors. Even though about 80% of Realty Income’s tenants are in retail, most are focused on defensive segments, with characteristics such as being service-oriented, naturally protected against e-commerce pressures, or resistant to economic downturns. Additionally, the triple-net lease structure places the burden of all operational risk and cost on the tenant and requires the tenant to make capital expenditures to maintain the property rather than the landlord. These leases are often long term, frequently 15 years with additional extension options, which provides Realty Income a steady stream of rental income. Coverage ratios are also very high, so tenants are healthy and unlikely to request rent concessions, even during downturns. The steady, stable stream of revenue has allowed Realty Income to be one of only two REITs to be members of the S&P High-Yield Dividend Aristocrats Index and have a credit rating of A- or better. This makes Realty Income one of the most dependable investments for income-oriented investors.