Realty Income Corporation (O): A Bull Case Theory

We came across a bullish thesis on Realty Income Corporation on Investing Lawyer’s Substack. In this article, we will summarize the bulls’ thesis on O. Realty Income Corporation's share was trading at $58.55 as of August 27^th. O’s trailing and forward P/E were 56.44 and 36.90 respectively according to Yahoo Finance.

Realty Income Corporation is widely recognized as a premier vehicle for dependable dividend income and has built its reputation as “The Monthly Dividend Company.” With a portfolio of more than 15,600 properties, predominantly single-tenant retail, industrial, and healthcare assets, it maintains relationships with major tenants such as Walgreens, Dollar General, and 7-Eleven. The company’s model ensures stable cash flow, as tenants typically cover operating and financial expenses, which underpins its ability to consistently generate reliable earnings.

Realty Income has paid 654 consecutive monthly dividends and raised its payout for 30 straight years, highlighting its strong commitment to shareholders. The current dividend yield stands at 5.6% with a payout ratio of 75%, leaving sufficient headroom for future growth while preserving balance sheet strength. Shares trade at $57, making the company a compelling choice for income-oriented investors seeking a combination of stability and predictability. Although not without risks, its large, diversified revenue base and resilient cash flows underscore the quality of the business model.

Beyond its core strategy of owning and leasing real estate, Realty Income is exploring entry into the data center market across the U.S. and Europe. This expansion could be transformative, given the surging demand for data infrastructure and the rise of AI-related electricity and storage needs. With its proven history of dividend reliability, scalable business model, and potential to capitalize on new growth opportunities, Realty Income offers an attractive risk/reward profile. The company’s simplicity and transparency make it especially appealing to both seasoned and beginner dividend investors.

Previously we covered a bullish thesis on Realty Income Corporation (NYSE:O) by Kroker Equity Research in January 2025, which highlighted the company’s diversification, disciplined financial management, and international expansion strategy. The company’s stock price has appreciated approximately by 9.6% since our coverage. The thesis still stands as Realty Income remains undervalued with resilient cash flows. Investing Lawyer shares a similar view but emphasizes its potential expansion into data centers.

Realty Income Corporation is not on our list of the 30 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 36 in the previous quarter. While we acknowledge the potential of O as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.