Realty Income: The Dividend Is The Tip Of The Iceberg

Kenio Fontes 3.08K Followers Follow Summary Realty Income's same-store rental growth is modest at around 1%, making it unrealistic to expect mid-single-digit organic growth from the existing portfolio alone (or without uncertainties). New investments remain attractive, with yields near 8% versus roughly 3.8% debt costs, while leverage and share issuance can support FFO growth. A roughly 7% FFO yield, ~3.5% expected FFO-per-share growth, and a high-quality portfolio make O's valuation reasonable, though not exceptionally cheap. The combination of stability, a ~5% dividend yield, FFO growth, and potential compounding supports a Buy rating despite limited margin of safety. Alones Creative/iStock via Getty Images Although I'm not the biggest fan of 'dividend investing' itself, I get it; dividends are cool. Having a company in your portfolio called "the monthly dividend company," or Realty Income ( O ), is also cool. But This article was written by Kenio Fontes 3.08K Followers Follow Equity Research Analyst with a broad career in the financial market, covered both Brazilian and global stocks. As a value investor, my analysis is primarily fundamental, focusing on identifying undervalued stocks with growth potential. Feel free to reach out for collaborations or to connect! Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.