Where Will Realty Income Stock Be in 1 Year?

Realty Income (NYSE: O) owns a portfolio of 15,500 single-tenant net-lease properties. It is the industry giant, with a market cap over 3 times that of its closest peer. That's good and bad. Here's why the next year is so important to monitor if you plan to buy and hold Realty Income for the long term.

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Realty Income's big problem

Realty Income is huge, explaining in its investor presentation that it is the sixth-largest global real estate investment trust (REIT). It owns properties in the United States and within eight European countries, including the United Kingdom. It has a heavy focus on retail properties, which make up roughly 80% of its rents.

The focus on retail is a bit misleading from a risk front because single-tenant retail assets tend to be very similar. That makes it relatively easy to buy, sell, and release the properties as needed. In addition to retail properties, the REIT also owns industrial properties (about 15% of rents) and more unique assets, like vineyards and casinos.

Management is well aware of the constraints it faces because of Realty Income's size. However, it has long worked to ensure it has ample room to grow its portfolio. The casino investment is a good example, as an initial asset acquisition has been followed by additional investments in the space. The newer investments have effectively been loans, expanding the types of assets in which Realty Income invests.

Realty Income is making even more powerful moves

That's just one example. An even more interesting move was the company's push into Europe, where the net lease approach is still less common. It started with a small investment, and today, the company has exposure in eight countries. It continues to invest heavily in the region, having made nearly $2.8 billion worth of investments in Europe through the first nine months of 2025. For comparison, it made $1.1 billion in investments in the United States.

In other words, it put a foot in the door and then used that to expand. Realty Income could be doing the exact same thing in Mexico right now. It just announced an agreement to buy industrial properties located in Mexico for $200 million upon completion of the assets. They are pre-leased to large global corporations, so they are fairly low-risk investments. This move is part of a larger partnership; however, the move into Mexico could open an entirely new region to the REIT. Long-term, Mexico could be the gateway to more investments in Central and South America.

That's not the only thing Realty Income is doing, either. Also in process is an asset management business targeted to institutional investors. This fee-generating business enables the REIT to leverage its in-house skills in a new way. Importantly, it allows Realty Income to buy lower-return properties that wouldn't fit in its owned portfolio, so there's little overlap on the investment side. The asset management business should be up and running in 2026.

All in, there's a lot happening over the next 12 months. At the end of it, Realty Income won't be a totally different REIT. However, it will have proven that it still has the capacity to innovate and grow.

Slow and steady but still growing

So, the big takeaway is that Realty Income is an industry giant, but it continues to find ways to grow. Investors shouldn't expect that growth to be fast, but slow and steady should be just fine when you combine it with a 5.3% dividend yield. Management's ultimate goal, however, is to ensure that Realty Income's 30-year streak of annual dividend increases keeps going. Which is why you should also expect four quarterly dividend increases in 2026, as well.

Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.