Can Realty Income's Broad Reach Shield It and Drive Superior Returns?

Realty Income’s O ability to pay monthly dividends for 667 straight months is closely tied to how its portfolio is structured. The REIT owns more than 15,500 properties leased to more than 1,600 tenants operating across 92 industries. Tenant exposure is tightly managed, with no single renter contributing more than 3.3% of annualized rent. This limits concentration risk and helps stabilize cash flows across economic cycles. Large national retailers, pharmacies and select experiential tenants form the backbone of this rent base.

Operating metrics from the third quarter of 2025 reflect that stability. Portfolio occupancy stood at 98.7%, and the company had a rent recapture rate across 284 leases of 103.5%, showing tenants stick around and pay more. The top 20 tenants generated about 35% of total rent, a diversified mix that has historically reduced earnings volatility. During the quarter, Realty Income deployed approximately $1.4 billion into new investments at an average initial yield of 7.7% amid consistent tenant demand.

Capital allocation has also evolved beyond traditional acquisitions. Deals like the $800 million preferred equity in CityCenter Las Vegas and a strategic tie-up with GIC add layers to this strength. These moves diversify beyond pure leases into stable income sources while keeping the core tenant base solid. Europe now brings in 17.7% of the total annualized base rent from 572 properties, blending U.S. retail with global reach for extra buffer.

With about 98% of the portfolio structured as single-tenant properties, predominantly with triple-net lease agreements, operating costs remain largely tenant-paid. This model has supported steady margins, enabling the company’s 133rd dividend increase and underpinning projections of more than $6 billion of investments in 2025. Check Realty Income’s dividend history here.

As such, growth keeps rolling for Realty Income. Spanning grocery, industrial and other assets, this REIT uses scale and data to secure attractive yields, diversify by tenant, geography and deal type and position the portfolio for varied market cycles.

How Are Other Retail REITs Diversifying?

Simon Property Group SPG, a behemoth in the retail REIT landscape, operates more than 200 properties, spanning malls, premium outlets, mills, lifestyle centers and other retail properties. Simon Property leases space to luxury brands, department stores and dining options. It has top tenants like Macy's and Nordstrom. SPG's tenant mix spans various retail categories.

Kimco Realty KIM is into ownership and operation of open-air, grocery-anchored shopping centers and mixed-use assets in the United States. Kimco has a well-diversified tenant base led by a healthy mix of essential, necessity-based tenants and omni-channel retailers. As of Sept. 30, 2025, Kimco’s five largest tenants, TJX Companies, Ross Stores, Burlington Stores, Inc., Amazon/Whole Foods and Albertsons Companies, Inc., contributed 3.8%, 1.8%, 1.8%, 1.7% and 1.7%, respectively, to its annualized base rental revenues.

O’s Price Performance, Valuation and Estimates

Shares of Realty Income have risen 8.7% over the past month, outperforming the industry’s growth of 3.6%.

From a valuation standpoint, O trades at a forward 12-month price-to-FFO of 13.91, below the industry but ahead of its one-year median of 13.15. It carries a Value Score of D.

Over the past seven days, estimates for O’s 2025 and 2026 FFO per share have remained unchanged.

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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