High-Yield Realty Income Is a Buy if You Love Reliable Dividend Stocks

Reuben Gregg Brewer, The Motley Fool

Sat, May 17, 2025, 6:32 PM 5 min read

• The market is volatile today, being driven by heightened emotions around geopolitical and economic issues.

• Realty Income is offering a generous 5.8% dividend yield backed by three decades of annual dividend increases.

• The giant net lease REIT's dividend streak is built atop an incredibly solid business foundation.

• 10 stocks we like better than Realty Income ›

The S&P 500 index (SNPINDEX: ^GSPC) is yielding just 1.3% today. The average real estate investment trust (REIT) is offering a 4.1% yield. Realty Income's (NYSE: O) dividend yield is a far more compelling 5.8%. That high yield, however, isn't the best part of the story. The really important thing to know about Realty Income has to do with the strength of its business. Here's why you'll love Realty Income if you are looking for reliable dividend stocks.

Finding high-yield stocks is actually pretty easy. All you need is one simple screen: dividend yield. There's one problem with only looking at dividend yield, however, because it can lead you to companies that aren't reliable dividend payers. For example, AGNC Investment (NASDAQ: AGNC) has a huge 15% dividend yield and a history of cutting its dividend. Regular dividend reductions probably aren't what most dividend investors have in mind when they buy a dividend stock.

So in addition to yield, you'll probably also want to consider dividend history. On that score, Realty Income shines. It has increased its dividend every year for 30 consecutive years. Within that streak is another one. It has increased its dividend every quarter for 110 quarters. And, as if that's not enough, the dividend is paid monthly, so it is as close to a paycheck replacement as a dividend investor can get with a dividend stock.

Taking things even deeper, Realty Income's balance sheet is investment grade rated. And the adjusted funds from operations (FFO) payout ratio was a solid 75% in the first quarter of 2025. In other words, the lofty yield on offer from Realty Income is on a very solid financial foundation.

If you are looking for a reliable dividend stock, Realty Income should be on your short list.

Basically, Realty Income is built from the ground up to pay you reliable dividends. It is a bit of a tortoise, but it lives up to the nickname it trademarked, "The Monthly Dividend Company." For starters, Realty Income is a net lease REIT, which owns single tenant properties for which the tenant is responsible for most property-level operating costs. Although any one property is high-risk, since there's only a single tenant, across a large enough portfolio the risk is very low. Realty Income owns over 15,600 properties.