Why 2025 Could Be the Year for Realty Income Stock

Motley Fool12-17

Realty Income grew its portfolio and raised its dividend even when interest rates were higher. The REIT's dividend yield is more than 4.5 times the S&P 500's average yield. Falling ...

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height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhy 2025 Could Be the Year for Realty Income Stock\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-17 16:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/12/17/why-2025-could-be-the-year-for-realty-income-stock/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Realty Income grew its portfolio and raised its dividend even when interest rates were higher.\n\n\n\n\n\n\n\nThe REIT's dividend yield is more than 4.5 times the S&P 500's average yield.\n\n\n\n\n\n\n\nFalling ...</p>\n\n<a href=\"https://www.fool.com/investing/2024/12/17/why-2025-could-be-the-year-for-realty-income-stock/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4080","symbol_name":"零售业房地产投资信托","start_time":0,"source_url":"https://www.fool.com/investing/2024/12/17/why-2025-could-be-the-year-for-realty-income-stock/","article_id":"2492359319","we_media_id":null,"thumbnails":["https://g.foolcdn.com/image/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F800963%2Frealty_income_logo_on_smartphone_ai_o.jpg&op=resize&w=165&h=104"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2492359319","pubTimestamp":1734423300,"columns":[],"sourceInfo":{"source_id":"fool_stock","name":"Motley Fool"},"weMediaInfo":null,"summary":"Realty Income grew its portfolio and raised its dividend even when interest rates were higher.The REIT's dividend yield is more than 4.5 times the S&P 500's average yield.Falling interest rates could attract more investors to the stock.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4080":"零售业房地产投资信托","REIT":"ALPS Active REIT ETF","BK4231":"零售房地产信托","BK4585":"ETF&股票定投概念","BK4588":"碎股","O":"Realty Income Corp"},"translate_title":"为什么2025年可能是房地产收入股的一年","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"O":1,"REIT":1,"US10Y.BOND":0.72,"US12M.BOND":0.72,"US2Y.BOND":0.72,"US30Y.BOND":0.72,"US3Y.BOND":0.72,"US5Y.BOND":0.72,"US6M.BOND":0.72,"US7Y.BOND":0.72},"content_text":"Realty Income grew its portfolio and raised its dividend even when interest rates were higher.\n\n\n\n\n\n\n\nThe REIT's dividend yield is more than 4.5 times the S&P 500's average yield.\n\n\n\n\n\n\n\nFalling interest rates could attract more investors to the stock.\n\nRealty Income (O -1.37%) stock has become a market enigma over the last few years. Though the real estate investment trust (REIT) has continued to expand, its stock is down by approximately one-third from the peak it touched in February 2020 as higher interest rates reduced its profitability. Nonetheless, the REIT continued to add properties and tenants despite the higher interest rates, a testament to the strength of its business. Now that the Federal Reserve is lowering interest rates, the stock could be due for a long-awaited recovery.The state of Realty Income stockRealty Income has prospered by net leasing single-tenant commercial properties. Since net lease arrangements transfer the costs of taxes, insurance, and maintenance to its tenants, it can, in theory, profit more.Moreover, as a REIT, it is obligated to pay at least 90% of its taxable income in dividends each year. Following that rule and operating under the REIT structure exempts companies like Realty Income from having to pay corporate income taxes on the profits from operations that they distribute. Realty Income has stood out in this regard, marketing itself as \"The Monthly Dividend Company.\" It makes its dividend payouts on a monthly schedule rather than the more common quarterly pattern, and it has increased its payouts at least once a year since it began distributing them in 1994.Furthermore, nearly 99% of its approximately 15,500 properties currently have tenants. Though the stock has struggled, the business has continued to buy and develop properties -- including the portfolio of more than 2,000 properties it gained when it bought Spirit Realty Capital in January. This is yet another confirmation that higher interest rates have not stopped the business's growth.How Realty Income fares financiallyNot surprisingly, the Spirit Realty acquisition was responsible for most of Realty Income's growth over the last year. In the first nine months of 2024, revenue rose by 31% to $3.9 billion.Amid the merger and impairment costs, its net income was almost $666 million in the first three quarters of 2024 and rose by only 1% yearly. Still, its funds from operations (FFO) -- a metric commonly used by REITs to provide a clearer picture of their free cash flow and operating performance -- rose by 27% year over year to $2.7 billion.For 2025, analysts forecast 6% revenue growth for Realty Income, a level more in line with its historical averages. Consequently, investors seem to have largely ignored its 2024 revenue and earnings growth, and despite some natural oscillations, the stock is actually down by a few percentage points over the last year.However, management has raised the monthly dividend on five separate occasions during the last 12 months. Investors now earn $3.17 per share annually in payouts. At the current share price, that amounts to a yield of 5.7%, more than 4.5 times the S&P 500's average dividend yield of 1.2%.When considering its P/E ratio of 53, the stock may appear expensive. Still, investors should remember that a REIT's net income includes large non-cash expenses such as depreciation and impairment. These skew its net income lower, which in turn skews its earnings multiple higher.This is why the preferred measure of a REIT's valuation is the price-to-FFO ratio. Realty Income stock trades at a ratio of 14. Such a level indicates this stock is inexpensive, especially considering that falling interest rates should increase its profits in the near term.Will 2025 be a winning year for Realty Income stock?Although anything could happen in 2025, Realty Income stock stands a strong chance of gaining ground over the next year.Despite its struggles in recent years,  the falling interest rates will give investors a new reason to consider this stock. What they will likely see is a company with a high dividend yield and a low valuation when measured against its FFO.Moreover, its nearly 99% occupancy rate and ongoing efforts to add to its property portfolio affirm the company's stability. Thus, shareholders will not only reap the profits from a high-yielding dividend, but they may also benefit from significant price growth as more investors take notice of Realty Income's compelling value proposition.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2492359319"}