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O

Realty Income NYSE:O Stock Report

Last Price

US$72.91

Market Cap

US$45.1b

7D

-2.4%

1Y

1.4%

Updated

19 Aug, 2022

Data

Company Financials +
O fundamental analysis
Snowflake Score
Valuation2/6
Future Growth2/6
Past Performance3/6
Financial Health2/6
Dividends6/6

O Stock Overview

Realty Income, The Monthly Dividend Company, is an S&P 500 company dedicated to providing stockholders with dependable monthly income.

Realty Income Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Realty Income
Historical stock prices
Current Share PriceUS$72.91
52 Week HighUS$75.40
52 Week LowUS$62.29
Beta0.71
1 Month Change3.79%
3 Month Change7.24%
1 Year Change1.39%
3 Year Change0.57%
5 Year Change25.62%
Change since IPO811.38%

Recent News & Updates

Aug 08

Is Realty Income Stock A Buy After Earnings? A-Rated 4% Yield

Realty Income has ramped up its acquisition machine. The company has increased its acquisition projections by 20% since the last report. AFFO is expected to rise double-digits this year. Trading at a 4% yield, the stock is highly buyable for those looking for a reliable dividend grower. After a recent rally, Realty Income (O) is trading near 52-week highs with the wind at its backs. The stock is still very buyable here at a 4% dividend yield. This is a company which has proven the resiliency of its business model and should continue to thrive even in the face of rising interest rates. While the stock might not offer as much upside as tech stocks or even net lease peers, O stock instead offers the benefit of respectable upside with less drama. O Stock Price O spent much of the year trading lower before a rally over the past two months has brought the stock back to yearly highs. O data by YCharts I last covered O in May where I rated the stock a buy on account of the strong earnings results. The stock has since delivered double-digit returns, though I still see more upside ahead. What Were Realty Income's Expected Earnings? When O released earnings on Wednesday August 3rd, consensus estimates called for $776.2 million in revenue and $0.99 in FFO per share. Did Realty Income Beat Earnings? O ended up beating on both these metrics with $1.02 in FFO per share and $810.4 million in revenue. These are modest beats, but respectable considering the high predictability of the net lease business model. O Stock Key Metrics In analyzing O’s earnings report, I will focus directly on what I view to be the key metrics. Recall that O is a net lease real estate investment trust (‘NNN REIT’). These are real estate landlords, but are better thought of as providers of real estate financing. This is because they acquire properties through “sale and leaseback” transactions in which future tenants sell properties to O and simultaneously sign long term leases. While O is technically a landlord, the tenant is responsible for real estate taxes, insurance, and maintenance costs. That makes this arrangement very similar to traditional bank financing, with the main difference that O gets ownership of the property. With this understanding of the business model in mind, O’s primary growth lever is through acquiring new properties. O acquired $1.6 billion worth of assets in the quarter, bringing its year to date acquisitions to $3.2 billion. Approximately 26% of the revenue generated by the acquired properties were from investment grade clients. I note that NNN REIT assets performed strongly during the pandemic even without high investment grade exposure. 2022 Q2 Supplemental O disposed of $122 million of properties in the quarter, bringing its year to date total to $272.2 million. That represents 8.5% of year to date acquisitions and is high relative to its historical rates. Disposition activity is a useful indicator for underwriting abilities as NNN REITs in general do not wish to undergo aggressive capital recycling. You can see below that most of the dispositions tend to be vacant and nonperforming. 2022 Q2 Supplemental In addition to external acquisitions, another growth lever comes from the annual lease escalators. O was able to generate 2% same store rental revenue growth - far exceeding its 1% annual lease escalators. Investors should not expect that strength to persist indefinitely because it was mainly driven by the fact that theater tenants are on stronger footing now than during the pandemic and are able to better pay their rents. 2022 Q2 Supplemental In the quarter, O was able to generate 5.6% leasing spreads and 5.9% year to date. I do not include this as a growth lever because NNN REITs typically do not realize strong leasing spreads - these strong results are likely to prove more near term. 2022 Q2 Supplemental O closed out the quarter with a strong balance sheet rated A3/A- by the credit rating issuers, with debt to EBITDA standing at a conservative 5.2x. 2022 Q2 Supplemental What To Expect After Earnings Looking forward, O has increased its full year guidance to up for 2% same store rent growth and $3.97 in AFFO per share. 2022 Q2 Supplemental The company expects to acquire $6 billion worth of properties, up from prior guidance of $5 billion. Is O A Good Investment Long-Term? O has been a tremendous long term investment for patient investors. O has delivered 27 consecutive years of growing dividends. 2022 Q2 Supplemental One might wonder how the rising interest rate environment might impact the stock. O notes that acquisition cap rates tend to track interest rates after 12 months.

Jul 22

Realty Income: 50 Big-Dividend REITs Compared

Like the overall market, big-dividend REIT share prices are down a lot this year. However, the share price of 4.2% yielding, monthly-paying, dividend-aristocrat, Realty Income, is up, thereby leaving many investors wondering if they should dump their shares and opportunistically move into something else. In this report, we review Realty Income's business, risks, valuation and compare it to 50 other big-dividend REITs and 60 other dividend aristocrats. We conclude with our opinion on investing. Realty Income Realty Income (known as the monthly dividend company) has been a safe haven this year as markets have declined sharply but Realty Income's share price is actually up a bit. However, some investors are left wondering if Realty Income still offers an attractive valuation or if it's time to shift new investment dollars elsewhere. We offer our opinion on the relative attractiveness of the shares, including a discussion of business strategy, the risks and the current valuation as compared to 50 other big-dividend REITs and as compared to 60 other "dividend aristocrats." Overview: Founded in 1969, Realty Income Corp (O) began trading publicly in 1994 and is focused on acquiring and managing commercial real estate properties. Its impressive track record of dividend increases has made it part of an elite group of 65 companies that make up the S&P 500 Dividend Aristocrat Index (i.e., S&P 500 companies that have increased their dividends for at least 25 consecutive years). We'll have more to say about dividend aristocrats later in this report. Realty Income Investor Presentation The company's portfolio consists of more than 6,700 properties that generate rental revenue from long-term lease agreements with commercial tenants (such as Walgreens, CVS and Dollar Tree, to name a few). Realty Income Investor Presentation The portfolio is diversified across tenants, industries and geographies. Nearly 96% of its rental revenue comes from tenants with a nondiscretionary service and/or a low price point component to their business. These tenants are resilient to economic downturns and significantly isolated from e-commerce pressures (from the likes of Amazon, for example). Realty Income Investor Presentation Business Strategy As one of the most stable and financially strong REITs in its space, Realty Income increasingly looks to acquisitions as a big part of its growth strategy. Realty Income Investor Presentation And it has the financial wherewithal to do this (for example, Realty Income is one of only seven U.S. REITs with two A3/A- ratings or better). Plus, the environment remains attractive for such a strategy considering the market is highly fragmented and because this year's economic challenges may leave increasing acquisition targets in some distress (i.e. a better time to get good deals on potential acquisitions). For example, Realty Income's recent large strategic merger with VEREIT created a premier net lease REIT with increased size and scale, supporting long-term growth through consolidation of a highly fragmented net lease industry. Risks: Of course, Realty Income's business does face risks. For example, the business is very large already (as compared to other REITs, see REIT comparison table later in this report) and this can make it challenging to grow at scale (thus the increasing acquisition strategy as described above). Another risk is simply interest rate risk. Specifically, Realty Income has long-term tenant leases with built in rent escalators, but the escalator increases are small and high inflation could pressure margins. This could create challenges, but as the company takes on new acquisitions, rates may be commensurate with the market, and the old rates will eventually roll off and be replaced. 50 Big-Dividend REITs, Compared: Before getting into more detail on valuation, here is a look at some important metrics on 50 big-dividend REITs. The table is organized by REIT industry, and as you can see-there has been some pretty ugly performance so far this year for most REITs, but not for Realty Income. blueharbinger.com data as of 21-Jul-22 (blueharbinger.com) You probably see at least a few of your favorite REITs in the table above (such as Simon Property Group (SPG), W. P. Carey (WPC) and Iron Mountain (IRM). And just some brief observations: (1) Office REITs have been challenged as more people are able to work from home, (2) Mortgage REITs (like AGNC (AGNC) and Annaly Capital (NLY)) are facing growing challenges as rising rates are creating book value challenges, and (3) After a great multi-year run, industrial REITs (like Stag Industrial (STAG) are down as the pandemic supply chain changes that benefitted them have now slowed. Valuation: From a valuation standpoint, Realty Income is relatively expensive compared to some peers, but not expensive as compared to its value. For starters, Realty Income trades at a higher price-to-Adjusted-FFO multiple (this year and next) than many of its peers, simply because it is a stronger healthier business (i.e. less risk). In part, the multiple is also stronger because the price of Realty Income has outperformed most other REITs so far this year (as the market has sold off) because of the strong "blue chip" nature of its business. Here is a look at Realty Income's recent adjusted price-to-FFO multiple as compared to peers. Essential Properties Realty Trust ((EPRT)) Investor Presentation Again, Realty Income is not particularly inexpensive as compared to peers, but this is because Realty Income is considerably healthier. It is also very important to note from a valuation standpoint, Realty Income still has positive expected growth in Adjusted Funds From Operations this year and next (a good thing), as you can see in this next chart. Essential Properties Realty Trust ((EPRT)) Investor Presentation And as Realty Income grows its acquisition pipeline, the expected growth for 2023 (see chart above) will likely rise (a good thing for Realty Income). And for reference, here is Realty Income's AFFO multiple earlier this year, and you can see it has come down a bit (good for "buy lower" long-term contrarians). Spirit Realty Earnings Call Presentation And very importantly, you can see in this next chart that Realty Income's valuation is also attractive by historical standards. For example, recent FFO per share exceeds levels before the pandemic, yet the share price does not, another indication that Realty Income currently trades at an attractive price-to-FFO multiple. YCharts Realty Income Versus Dividend Aristocrats Comparing Realty Income to its dividend aristocrat peers (i.e. S&P 500 companies that have also increased their dividend for at least 25 years in a row) provides interesting perspective and insights. For starters, here are the dividend aristocrats, including important metrics like dividend yield, market cap, short interest and performance.

Shareholder Returns

OUS REITsUS Market
7D-2.4%0.5%1.4%
1Y1.4%-4.0%-8.4%

Return vs Industry: O exceeded the US REITs industry which returned -4% over the past year.

Return vs Market: O exceeded the US Market which returned -8.4% over the past year.

Price Volatility

Is O's price volatile compared to industry and market?
O volatility
O Average Weekly Movement3.0%
REITs Industry Average Movement4.1%
Market Average Movement7.6%
10% most volatile stocks in US Market17.1%
10% least volatile stocks in US Market3.1%

Stable Share Price: O is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: O's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1969380Sumit Royhttps://www.realtyincome.com

Realty Income, The Monthly Dividend Company, is an S&P 500 company dedicated to providing stockholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with our commercial clients. To date, the company has declared 608 consecutive common stock monthly dividends throughout its 52-year operating history and increased the dividend 109 times since Realty Income's public listing in 1994 (NYSE: O).

Realty Income Fundamentals Summary

How do Realty Income's earnings and revenue compare to its market cap?
O fundamental statistics
Market CapUS$45.10b
Earnings (TTM)US$561.61m
Revenue (TTM)US$2.79b

80.2x

P/E Ratio

16.1x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
O income statement (TTM)
RevenueUS$2.79b
Cost of RevenueUS$177.89m
Gross ProfitUS$2.61b
Other ExpensesUS$2.05b
EarningsUS$561.61m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)0.91
Gross Margin93.62%
Net Profit Margin20.14%
Debt/Equity Ratio60.5%

How did O perform over the long term?

See historical performance and comparison

Dividends

4.1%

Current Dividend Yield

82%

Payout Ratio

Does O pay a reliable dividends?

See O dividend history and benchmarks
When do you need to buy O by to receive an upcoming dividend?
Realty Income dividend dates
Ex Dividend DateAug 31 2022
Dividend Pay DateSep 15 2022
Days until Ex dividend11 days
Days until Dividend pay date26 days

Does O pay a reliable dividends?

See O dividend history and benchmarks
We’ve recently updated our valuation analysis.

Valuation

Is O undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for O?

Other financial metrics that can be useful for relative valuation.

O key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue22x
Enterprise Value/EBITDA23.9x
PEG Ratio5.6x

Price to Earnings Ratio vs Peers

How does O's PE Ratio compare to its peers?

O PE Ratio vs Peers
The above table shows the PE ratio for O vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average23.4x
SPG Simon Property Group
17.3x-0.6%US$41.7b
KIM Kimco Realty
20.7x5.8%US$14.1b
REG Regency Centers
22.9x-7.2%US$11.1b
FRT Federal Realty Investment Trust
32.8x8.3%US$8.9b
O Realty Income
80.2x14.2%US$45.1b

Price-To-Earnings vs Peers: O is expensive based on its Price-To-Earnings Ratio (80.2x) compared to the peer average (23.4x).


Price to Earnings Ratio vs Industry

How does O's PE Ratio compare vs other companies in the US REITs Industry?

Price-To-Earnings vs Industry: O is expensive based on its Price-To-Earnings Ratio (80.2x) compared to the US REITs industry average (32.2x)


Price to Earnings Ratio vs Fair Ratio

What is O's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

O PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio80.2x
Fair PE Ratio52.2x

Price-To-Earnings vs Fair Ratio: O is expensive based on its Price-To-Earnings Ratio (80.2x) compared to the estimated Fair Price-To-Earnings Ratio (52.2x).


Share Price vs Fair Value

What is the Fair Price of O when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: O ($72.91) is trading below our estimate of fair value ($163.34)

Significantly Below Fair Value: O is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Realty Income forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


14.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: O's forecast earnings growth (14.2% per year) is above the savings rate (1.9%).

Earnings vs Market: O's earnings (14.2% per year) are forecast to grow slower than the US market (14.4% per year).

High Growth Earnings: O's earnings are forecast to grow, but not significantly.

Revenue vs Market: O's revenue (12.5% per year) is forecast to grow faster than the US market (7.8% per year).

High Growth Revenue: O's revenue (12.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: O's Return on Equity is forecast to be low in 3 years time (3.6%).


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Past Performance

How has Realty Income performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


8.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: O has a large one-off loss of $164.4M impacting its June 30 2022 financial results.

Growing Profit Margin: O's current net profit margins (20.1%) are lower than last year (21%).


Past Earnings Growth Analysis

Earnings Trend: O's earnings have grown by 8% per year over the past 5 years.

Accelerating Growth: O's earnings growth over the past year (55.5%) exceeds its 5-year average (8% per year).

Earnings vs Industry: O earnings growth over the past year (55.5%) exceeded the REITs industry 47.9%.


Return on Equity

High ROE: O's Return on Equity (2.1%) is considered low.


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Financial Health

How is Realty Income's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: O's short term assets ($1.5B) exceed its short term liabilities ($1.5B).

Long Term Liabilities: O's short term assets ($1.5B) do not cover its long term liabilities ($17.1B).


Debt to Equity History and Analysis

Debt Level: O's net debt to equity ratio (59.8%) is considered high.

Reducing Debt: O's debt to equity ratio has reduced from 85.2% to 60.5% over the past 5 years.

Debt Coverage: O's debt is not well covered by operating cash flow (12.5%).

Interest Coverage: O's interest payments on its debt are not well covered by EBIT (2.9x coverage).


Balance Sheet


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Dividend

What is Realty Income current dividend yield, its reliability and sustainability?

Dividend Score

6/6

Dividend Score 6/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


4.07%

Current Dividend Yield

Upcoming Dividend Payment

TodayAug 20 2022Ex Dividend DateAug 31 2022Dividend Pay DateSep 15 202215 days from Ex DividendBuy in the next 11 days to receive the upcoming dividend

Dividend Yield vs Market

Notable Dividend: O's dividend (4.07%) is higher than the bottom 25% of dividend payers in the US market (1.47%).

High Dividend: O's dividend (4.07%) is in the top 25% of dividend payers in the US market (3.97%)


Stability and Growth of Payments

Stable Dividend: O's dividends per share have been stable in the past 10 years.

Growing Dividend: O's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (81.8%), O's payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (92%), O's dividend payments are covered by cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

5.5yrs

Average management tenure


CEO

Sumit Roy (52 yo)

6.75yrs

Tenure

US$12,861,011

Compensation

Mr. Sumit Roy serves as President at Realty Income Corporation since November 2015 and Chief Executive Officer and Director since October 16, 2018. Mr. Roy served as the Chief Operating Officer of Realty I...


CEO Compensation Analysis

Compensation vs Market: Sumit's total compensation ($USD12.86M) is about average for companies of similar size in the US market ($USD12.86M).

Compensation vs Earnings: Sumit's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: O's management team is seasoned and experienced (5.5 years average tenure).


Board Members

Experienced Board: O's board of directors are considered experienced (4.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been substantially diluted in the past year, with total shares outstanding growing by 58.7%.


Top Shareholders

Company Information

Realty Income Corporation's employee growth, exchange listings and data sources


Key Information

  • Name: Realty Income Corporation
  • Ticker: O
  • Exchange: NYSE
  • Founded: 1969
  • Industry: Retail REITs
  • Sector: Real Estate
  • Implied Market Cap: US$45.105b
  • Market Cap: US$45.028b
  • Shares outstanding: 618.64m
  • Website: https://www.realtyincome.com

Number of Employees


Location

  • Realty Income Corporation
  • 11995 El Camino Real
  • San Diego
  • California
  • 92130
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/19 00:00
End of Day Share Price2022/08/19 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.