3 Bold Predictions for Realty Income in 2026

Large-cap real estate investment trust (REIT) Realty Income (NYSE: O) hasn't exactly been a great performer in recent years. Over the past decade, the stock has produced a 93% total return for investors, which might not sound too bad until you realize the S&P 500 has produced a 337% total return over the same period.

To be fair, there are some good reasons for this. For much of the past decade, we've been in rising-rate environments, plus we had a global pandemic that resulted in the bulk of Realty Income's properties being temporarily closed.

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However, I feel that 2026 could be a different situation entirely. Here are three bold predictions I'm making for the coming year.

1. Realty Income will (finally) outperform the S&P 500

The first bold prediction is a simple one. I believe interest rates will fall significantly in 2026, and I'm not just talking about the Federal Reserve's rate cuts. Longer-term rates, such as the 10-year Treasury yield, could trend sharply lower as well.

REITs are highly rate-sensitive stocks, and throughout its 32-year publicly traded history, Realty Income has averaged a 13.7% total return, with generally better results when rates fall. So, I'm predicting that Realty Income will produce a total return in 2026 that outperforms the S&P 500.

2. Realty Income will have a big year for acquisitions

Based on the company's guidance, Realty Income is expected to report $5.5 billion in investments for 2025 when we see year-end results in a few weeks. This is a large volume of acquisitions, even for a REIT as large as Realty Income. But I think 2026 will be even bigger. As rates fall and the cost of capital becomes more advantageous, I think Realty Income's management will step on the gas, especially when it comes to newer investment areas such as data centers and gaming properties.

3. Investors will get a 5% dividend raise

Since listing on the New York Stock Exchange in 1994, Realty Income has averaged a 4.2% dividend growth rate. Over the past decade, Realty Income's dividend has grown at a much slower 3.5% annualized rate. But I'm predicting that improving market conditions will allow Realty Income to raise its monthly payout by a total of 5% or more by the end of 2026.

Of course, these are meant to be bold predictions, so there's absolutely no guarantee I'll be right. But the point is that conditions are looking far more favorable for REIT performance, and I'm excited to see how it plays out.

Matt Frankel, CFP has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.