Stock Outperforming Market in 2025 Among Dividend Champions
Realty Income Corporation, a renowned Real Estate Investment Trust (REIT), is making waves in the industry despite the current high interest rates that have made property acquisitions more challenging.
One of the key attractions of Realty Income is its dividend yield, which stands at 5.4% at today's price. This is more than three times higher than the average yield of the S&P 500. The dividend, paid monthly for over 55 years, makes Realty Income an appealing choice for long-term investors seeking a high yield.
Realty Income's management has identified a substantial market for leasable properties. In its current markets, there is an $8.5 trillion market, and as it expands into new verticals, this figure grows to $14 trillion.
The company's diverse tenant base, consisting of over 1,600 different tenants, is a testament to its success. These tenants operate in 91 different industries, with lease agreements covering more than 15,600 properties worldwide.
While the top tenants in Realty Income's portfolio are not publicly ranked, they include major companies from sectors such as drugstores, convenience stores, and dollar stores. Notable names among the top tenants are Dollar General, Walgreens, Life Time Group Holdings, Wynn Resorts, and Sainsbury's.
Grocery and convenience stores account for about 20% of Realty Income's paid leases. The company's model revolves around purchasing properties and creating long-term lease contracts.
Despite the challenges posed by high interest rates, Realty Income's stock is outpacing the market, both with and without dividends included. However, the stock is currently about 25% off of its all-time highs due to market pessimism.
In a positive development, Realty Income has increased its Adjusted Funds From Operations (AFFO) guidance for the full year. This indicates a promising outlook for the company's financial performance.
Moreover, Realty Income is not resting on its laurels. It is expanding into new verticals like data centers, positioning itself for growth in the future. If interest rates come down and the real estate market improves, Realty Income will be in an even better position to deliver value for shareholders.
In conclusion, despite the challenges posed by high interest rates, Realty Income remains a strong contender in the REIT industry. Its high dividend yield, diverse tenant base, and strategic expansion plans make it an excellent choice for long-term investors seeking a high yield.
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