Is O a good stock to buy? We came across a bullish thesis on Realty Income Corporation on TheDividendPrince’s Substack. In this article, we will summarize the bulls’ thesis on O. Realty Income Corporation’s share was trading at $63.12 as of June 26th. O’s trailing and forward P/E were 51.74 and 39.53 respectively according to Yahoo Finance.
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Realty Income Corporation, an S&P 500 company, is real estate partner to the world’s leading companies. O emerges as a high-quality net-lease REIT offering a compelling blend of income stability and long-term compounding potential, despite short-term concerns around leverage and rate sensitivity. The company currently trades at $60, against an estimated fair value of approximately $75.00, implying around 24% upside that reflects meaningful market undervaluation of its durable cash-flow profile.
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Realty Income generates a 5.38% dividend yield with a 72/100 safety score, supported by a 75.9% FFO payout ratio that remains manageable within REIT norms, even as the 80.7% CFO payout ratio signals tighter cash coverage. The business benefits from strong liquidity, evidenced by a 2.1x current ratio, and a robust 45.5% operating margin, underscoring operational efficiency. Its scale is a key advantage, with over 15,500 properties across 47 industries and 250 tenants, maintaining near 98% occupancy, heavily concentrated in defensive, non-discretionary retail segments such as grocery, convenience, dollar, and drug stores, which provide resilience against e-commerce disruption.
As a Dividend Aristocrat with more than 25 consecutive years of dividend increases and a monthly payout structure, Realty Income has established a strong shareholder return identity anchored in consistency. While Morningstar assigns no formal moat due to limited internal rent growth of roughly 1% and reliance on acquisition spreads over financing costs, the long-term strategy remains intact if capital deployment remains disciplined.
Elevated interest rates have compressed acquisition spreads, creating near-term pressure, while low ROE of 2.8% and 2.0x interest coverage highlight financial constraints. However, at current valuation levels, the combination of scale, defensive cash flows, and embedded yield makes Realty Income a compelling income-oriented opportunity with attractive upside rerating potential if macro conditions stabilize.
Previously, we covered a bullish thesis on Realty Income Corporation (NYSE:O) by Kroker Equity Research in January 2025, highlighting diversification across 15,450 properties, long-term net lease agreements, and stable dividend growth. O’s stock price has appreciated by approximately 18.18% since our coverage. TheDividendPrince shares a similar view but emphasizes valuation upside and dividend safety metrics under current interest rate pressure.
Realty Income Corporation is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held O at the end of the first quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of O as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than O and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
