This Consistent Dividend Stock Shows Why It Belongs in Your Portfolio

Key Points

• Realty Income delivered stable results despite all the turbulence in the second quarter.

• The REIT is raising its full-year earnings and investment guidance.

• The company's diversification strategy has really paid dividends for investors.

• 10 stocks we like better than Realty Income ›

Realty Income (NYSE: O) stands out for its unmatched consistency as a dividend stock. The real estate investment trust (REIT) delivers robust and reliable rental income throughout economic cycles. This stability supports Realty Income's ability to pay dependable dividends and strategically expand its portfolio -- a combination that should capture every investor's attention.

Realty Income's strong performance in the second quarter amid market instability reinforced its reputation as a top-tier dividend stock. Despite tariffs and interest rate fluctuations, the company produced steady results, demonstrating why consistency in both returns and dividends makes it a must-own investment for those seeking both growth and stability.

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Another solid quarter

Realty Income generated $947.5 million, or $1.05 per share, of adjusted funds from operations (FFO) during Q2. That compares to $921.1 million, or $1.06 per share, in the same period last year. Its adjusted FFO per share was down slightly due to an increase in its outstanding shares as the REIT issued more stock to fund new investments.

The company's core portfolio delivers stable income. Realty Income reported nearly $1.2 billion in same-store rental revenues, slightly higher than last year as contractual rental increases offset lease expirations. It released 293 properties to the same tenant and 17 to new clients at an average 3.4% rent increase. It also sold 64 vacant properties (out of 73 total), generating $116.8 million in proceeds and a $38.6 million gain.

Realty Income invested $1.2 billion in new properties at a strong 7.2% weighted average cash yield. Most investments were in Europe (76%), with the rest in the U.S. It spread its investment volume across retail (46.6%), industrial (33%), and other properties (20.4%). That brought its year-to-date investment volume to $2.5 billion.

On track for another solid year

Realty Income's solid first-half showing and robust pipeline of new investment opportunities are driving the REIT to raise its 2025 guidance. It now expects its adjusted FFO to be between $4.24 and $4.28 per share (up from $4.22 to $4.28 per share). That's a roughly 2% increase from last year's level.

The main factor driving the upward revision in its guidance is its success in securing new investments. Its strong first half and robust pipeline of new investment opportunities have the REIT now expecting to invest $5 billion this year. That's a $1 billion increase from its initial guidance.

Realty Income's diversification strategy has enhanced its ability to grow by increasing its investment opportunity set. For example, its expansion into Europe in more recent years has really paid off. Roughly 70% of its investment volume this year has been in Europe. The company has also invested over 20% of its capital in property types other than its core retail and industrial focus areas, such as data centers. The company also made nearly $225 million in credit investments this year (real estate-backed loans).

The company's broad investment reach enables it to be highly selective in its investments. Realty Income sourced $43 billion of potential investment opportunities during Q2. That was the highest in its history and matched its volume from the entire previous year. The REIT was very selective (it only closed 2.7% of its sourced volume), only moving forward with the best investment opportunities.

Realty Income's growing portfolio and adjusted FFO per share allow it to continue increasing its dividend. The company has already raised its monthly dividend four times this year (and 131 times since its public market listing in 1994). It has increased its payment by 3.7% over the past year. It still has plenty of cushion, evidenced by its comfortable 76.8% payout ratio at the end of Q2. This has enabled it to produce over $380 million of surplus free cash flow through the first half of the year, providing it with additional capital to invest in income-generating properties.

A top-notch dividend stock

With its proven ability to generate growing, stable cash flow, Realty Income provides investors with a reliable and rising dividend that currently yields 5.7%. For those seeking a rare blend of income and steady growth, this REIT is a top-tier choice to consider for any portfolio.

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Matt DiLallo has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.