Key Points
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A diverse and stable client base ensures a consistent revenue stream.
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The monthly dividend has grown consistently despite a high yield.
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The company has maintained robust growth even in high-interest-rate environments.
In the investment landscape, many shareholders overlook real estate assets like Realty Income (NYSE:O), often because they lack the explosive growth typical of the technology sector.
However, Realty Income compensates for slower growth with exceptional stability and a formidable competitive moat. There are three primary reasons why investors might consider this real estate investment trust (REIT) a permanent fixture in a long-term portfolio.
Image source: The Motley Fool.
1. A diverse and stable client base
Realty Income specializes in single-tenant, net-leased properties. Under these lease structures, tenants assume responsibility for insurance, maintenance, and property taxes. This model provides Realty Income with a predictable revenue stream by minimizing unexpected operational costs.
Beyond the lease structure, the company’s moat is reinforced by its blue-chip clientele. Industry leaders such as Walmart, Wynn Resorts, and FedEx are among the many tenants. Because these are stable, profitable entities, Realty Income faces minimal risk in collecting rent across its portfolio of approximately 15,600 properties.
The ability of these tenants to preserve capital by renting rather than owning further stabilizes the relationship. With occupancy rates approaching 99%, Realty Income is positioned to continue acquiring more properties and gradually increasing rental rates, driving sustained revenue growth.
2. Generous monthly dividends
Realty Income’s reputation as a “monthly dividend company” is well-earned. It has distributed a dividend every single month since 1994 and has implemented annual dividend increases for decades, offering a reliable source of passive income.
The current annual payout exceeds $3.25 per share, representing a yield of over 4.9%. This significantly outperforms the S&P 500 average of 1.1%. Importantly, the company’s fundamentals are strong; with funds from operations (FFO) of $4.26 per share over the last 12 months, the dividend is well-covered by cash flow.
For income-focused investors, this yield is highly competitive against government bonds, with the added potential for dividend growth and long-term capital appreciation. This makes Realty Income a more dynamic alternative to fixed-income instruments.
3. Sustained growth across economic cycles
While the stock has faced headwinds from rising interest rates since 2022, it remains positioned for recovery. Despite the impact of higher rates on its valuation, the company has refused to slow its expansion.
Realty Income’s portfolio has seen massive scaling. From just under 6,700 properties in early 2021, the company has grown to nearly 15,600. Strategic acquisitions, such as VEREIT in 2021 and Spirit Realty in 2024, have significantly bolstered its footprint, even amidst fluctuating interest rate environments.
While the stock price has not yet fully reflected this massive doubling of the property portfolio, investors may find value as the market begins to recognize the company’s enhanced scale and improved value proposition.
Conclusion: The strength of the moat
The combination of these three factors creates a formidable competitive moat. The blue-chip tenant base provides revenue stability, the monthly dividend offers compelling income, and the company’s ability to scale through various interest rate cycles proves its resilience.
These elements suggest that Realty Income is well-equipped to deliver steady, growing returns regardless of broader economic fluctuations.
*Stock Advisor returns as of July 22, 2026.
Will Healy has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income and Walmart. The Motley Fool recommends FedEx. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
