Is Realty Income a No-Brainer REIT to Buy in 2025?

Stubbornly high interest rates have made investing in property more of a challenge — there’s a huge difference in your mortgage when you’re weighing a sub-3% interest rate with one that’s 6%. That’s why I also appreciate Realty Income (O -0.38%) as perhaps one of the best real estate investment trusts (REITs) you can buy.

But does it make sense to invest in Realty Income today? In a world of high interest rates, concerns about tariffs and trade wars, and a challenging retail landscape, is Realty Income stock still a no-brainer pick as it was in the past?

Let’s look closer at this monthly dividend stock and see how it stacks up in 2025.

What is Realty Income?

As a REIT, Realty Income is a way to invest in multiple properties all at once. The company owns 15,600 properties that are leased to more than 1,500 clients. And Realty Income provides diversity — its clients represent nearly 100 industries, and are found in all 50 states, the U.K., and in six other European countries.

Because it’s a REIT, Realty Income doesn’t pay federal income tax and is required to return 90% of its profits directly to shareholders in distributions. That means REITs typically have an attractive dividend yield and are great choices for any investor looking for a passive income stream.

And Realty Income stock is one of the best on that score. The company pays a dividend yield of 5.6% every month, which is outstanding. Monthly dividend stocks are more appealing than quarterly dividend stocks because you get your money faster — which means you can reinvest it right away and take advantage of the power of compounding interest, or you can use it for monthly living expenses.

And here’s the feather in the cap: Realty Income has paid its dividend 661 consecutive months, or every month in the company’s 55-year history. It’s also on a 131-quarter streak of raising its dividend. You don’t get more reliable than that.

Measuring yield versus return

While the dividend yield and regular income makes Realty Income stock appealing, the downside is the stock performance over the last few quarters. The stock is down 20% over the last three years, although it gained 7% so far this year, roughly on par with the major indices.

O data by YCharts

True, REITs haven’t been as sexy of an investment in recent years. Higher interest rates means that the cost of borrowing to buy property is up, and that tends to squeeze any REIT’s margins. In addition, the increase in yields from Treasury bonds prompted many income investors to switch to the safer play. Realty Income felt that squeeze, as the company’s profit margins slipped even as revenue increased.

O Revenue (Annual) data by YCharts

Earnings for the first quarter were $1.38 billion, up from $1.26 billion in the previous year. Income was $249.8 million and $0.28 per share, versus $129.7 million and $0.16 per share in the first quarter of 2024.

How to invest in Realty Income today

The good news about Realty Income is that even in today’s economy, this is a solid income play.

First, the company focuses on net lease agreements, which means that the tenant, not the landlord, is responsible for paying at least a portion of expenses such as repairs, insurance, and taxes. Secondly, Realty Income has a stable base of tenants — its average remaining term on its leases is 9.1 years, and the company has an occupancy rate of 98.5%. And finally, the company’s properties remain in demand. Its rent recapture rate was a crisp 103.9% in the first quarter — meaning that when it does need to turn over a property, it can usually negotiate a higher rent with the new tenant.

So, while Realty Income isn’t a huge growth machine for your portfolio, it does provide stability, regular income, and diversification from growth stocks.

I wouldn’t call it a no-brainer pick. But it’s also a sensible real estate play. I would say Realty Income makes sense for many investors, depending on what their portfolios need to achieve diversification.