Can O Stock Keep Climbing After Delivering 11.6% YTD Growth in 2025?

Realty Income O has delivered a solid 11.6% year-to-date (YTD) gain, sparking debate over whether the REIT still offers an appealing valuation or if investors should wait for a better entry point. 

The stock has outperformed its peers in the free-standing retail space, including Agree Realty Corporation ADC and NNN REIT, Inc. NNN, and has also beaten the broader Zacks REIT and Equity Trust - Retail industry. That said, it continues to trail the S&P 500 composite. 

On the positive side, Realty Income’s expansion efforts across the United States and Europe support its long-term growth outlook, and a recent dividend increase has further lifted sentiment. Still, the investment case is not without risks. In the following discussion, we’ll weigh the strengths and challenges to determine whether O merits a buy, hold or sell stance.

Year-to-Date Price Performance

What’s Fueling Realty Income’s Share Price Performance?

Realty Income continues to distinguish itself as one of the most stable and reliable REITs in the market, appealing to investors seeking durable cash flows and steady dividends. Over the years, the company has transformed from a traditional U.S.-focused net lease landlord into a diversified global platform spanning multiple sectors. Today, it owns more than 15,600 properties across the United States and Europe, with a tenant mix heavily weighted toward non-discretionary retail and service categories. Roughly 90% of rental revenues come from businesses that remain resilient through economic cycles and are less vulnerable to online disruption.

Its disciplined acquisition approach and emphasis on high-quality real estate underpin consistently strong occupancy. Realty Income’s historical median occupancy stands at 98.3%, well above industry averages. As of June 30, 2025, portfolio occupancy was 98.6%, and management expects levels to stay above 98% through year-end. Lease renewals also reflect strong tenant demand. Across 346 leases, the company captured 103.4% of expiring rent, including a 139% recapture rate on leases signed with new tenants.

Growth opportunities remain compelling. Realty Income has been actively expanding in Europe and has entered growth verticals such as gaming and data centers. During the second quarter of 2025, it deployed $1.2 billion at a 7.2% yield, with a weighted-average lease term of 15.2 years, 76% of which was in Europe. With a $14 trillion global net lease market opportunity and management targeting about $5 billion of investments this year, the company is building a solid foundation for long-term expansion.

Financial strength reinforces this growth story. The REIT has $5.1 billion in liquidity, maintains investment-grade credit ratings and offers a dividend yield of 5.47%. True to its nickname, “The Monthly Dividend Company,” Realty Income has increased its payout for 112 consecutive quarters, most recently announcing its 132nd hike since its 1994 listing, payable on Oct. 15 to shareholders of record as of Oct. 1.

What Could Restrain O’s Progress?

Still, headwinds exist. Even as interest-rate cuts provide relief, they may not deliver a sharp near-term boost to AFFO growth, given macroeconomic issues and tight acquisition spreads. Additionally, while management lifted 2025 investment guidance to $5 billion, its current-year outlook assumes 75 basis points of potential rent loss — higher than its historical experience — largely tied to tenants acquired through past M&A activity.

O’s Estimate Revisions and Valuation

The estimate revisions also echo similar expectations. The Zacks Consensus Estimate for 2025 adjusted funds from operations (AFFO) per share has moved south marginally over the past 60 days, while the same for 2026 has remained unchanged over the same time frame.

O’s Consensus Estimate Trend (60 Days)

Realty Income stock is trading at a forward 12-month price-to-FFO of 13.53X, below the retail REIT industry average of 15.05X but higher than its one-year median of 13.15X. While Realty Income stock is currently trading at a reasonable discount compared to its industry peer Agree Realty Corporation, it is at a slight premium to NNN. This valuation disparity might not be as favorable as it seems. Agree Realty is trading at a forward 12-month price-to-FFO of 15.89X, while NNN is trading at 11.91X.

Forward 12 Month Price-to-FFO (P/FFO) Ratio

Final Verdict on Realty Income

Realty Income remains a leading dividend-focused REIT, valued for its consistent payouts and long-term growth profile. Its diversified tenant base and net lease model concentrated in essential retail and service sectors provide resilience during economic uncertainty.

Expansion in Europe reflects a strategic push toward geographic diversification. With a strong balance sheet and investment-grade ratings, the company is financially well-positioned. While shares trade at a relative discount to peers like Agree Realty, fresh investors may prefer caution until conditions stabilize. For current holders, Realty Income’s reliable dividends and defensive portfolio make it a solid hold.

At present, Realty Income carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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