Realty Income Corp
NYSE:O
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Intrinsic Value
The intrinsic value of one O stock under the Base Case scenario is 60.01 USD. Compared to the current market price of 61.75 USD, Realty Income Corp is Overvalued by 3%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Realty Income Corp
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Fundamental Analysis
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Realty Income Corp., often referred to as the "Monthly Dividend Company," is a distinguished real estate investment trust (REIT) that has captured the attention of income-focused investors. Established in 1969, the company specializes in acquiring and managing retail and commercial properties that are characterized by long-term, net lease agreements. This unique business model allows Realty Income to benefit from steady, predictable cash flows while minimizing operational responsibilities, as tenants cover expenses like property taxes, insurance, and maintenance. Such a structure lends stability to its performance, making it a reliable choice for investors seeking consistent income through m...
Realty Income Corp., often referred to as the "Monthly Dividend Company," is a distinguished real estate investment trust (REIT) that has captured the attention of income-focused investors. Established in 1969, the company specializes in acquiring and managing retail and commercial properties that are characterized by long-term, net lease agreements. This unique business model allows Realty Income to benefit from steady, predictable cash flows while minimizing operational responsibilities, as tenants cover expenses like property taxes, insurance, and maintenance. Such a structure lends stability to its performance, making it a reliable choice for investors seeking consistent income through monthly dividends.
As of 2023, Realty Income boasts a diversified portfolio of thousands of properties located across 49 states and in several international markets, housing tenants from a variety of industries, including convenience stores, drug stores, and dollar stores. With a steadfast commitment to growing their dividend, the company has built an enviable track record, increasing its payout for more than 50 consecutive years. This attention to shareholder returns, coupled with a disciplined acquisition strategy, positions Realty Income as a formidable player in the real estate market. For investors looking for a vehicle that combines income generation with potential long-term capital appreciation, Realty Income offers a compelling narrative of stability, growth, and financial prudence.
Realty Income Corporation is a well-known real estate investment trust (REIT) that primarily focuses on investing in commercial properties. The company is distinguished by its business model of generating income through long-term leases with tenants, often in the form of net lease arrangements. Here are the core business segments of Realty Income Corp.:
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Retail Properties: Realty Income invests heavily in retail locations, which include convenience stores, drugstores, dollar stores, and other essential retail establishments. These properties typically have long-term leases and are leased to stable, creditworthy tenants, ensuring a reliable income stream.
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Commercial Properties: Beyond retail, Realty Income also invests in various types of commercial properties, which can include office buildings and industrial spaces. The focus is often on properties that are integral to everyday business operations and have tenants with strong financial backgrounds.
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Healthcare Properties: An increasing portion of Realty Income's portfolio includes healthcare-related properties such as medical office buildings, urgent care facilities, and senior living communities. This segment benefits from the growing demand for healthcare services due to demographic trends and an aging population.
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Industrial Properties: Realty Income has been expanding its investment in industrial properties that support e-commerce and logistics. This includes warehouses and distribution centers that are critical for modern supply chains.
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Other Property Types: The company may also invest in unique property types, such as free-standing buildings, locations occupied by essential service providers, and specialized facilities with long-term lease agreements.
Overall, Realty Income Corp. emphasizes diversification across these segments to stabilize income and minimize risks related to economic downturns or sector-specific challenges. The company's strategy is also characterized by a focus on acquiring properties that offer a strong potential for consistent cash flow, which aligns with its commitment to delivering monthly dividends to its shareholders.
Realty Income Corp, often referred to as a "Dividend Company" or the "Monthly Dividend Company," has several unique competitive advantages over its rivals in the real estate investment trust (REIT) sector:
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Monthly Dividend Payments: Realty Income pays dividends monthly, which is attractive for income-focused investors. This monthly payment schedule differentiates it from many peers that typically pay quarterly dividends, aligning well with individual cash flow needs.
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Diverse and Stable Revenue Stream: The company invests in a diversified portfolio of commercial properties, primarily retail and convenience stores, with long-term net lease agreements. This diversification reduces risk and ensures stable revenue, even during economic downturns.
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Strong Credit Quality: Realty Income focuses on acquiring properties with high-quality tenants that have strong credit ratings. This strategy minimizes default risk and provides a more reliable income stream.
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Long-Term Lease Agreements: Realty Income typically engages in long-term, net lease agreements, which shifting responsibilities (like property maintenance) to tenants. This structure helps secure predictable cash flows and reduces operational risks.
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Strong Brand Recognition: Known for its "Monthly Dividend" philosophy, Realty Income has cultivated a strong brand presence that resonates with dividend investors. The company has built a reputation for reliability and stability, attracting a loyal investor base.
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Solid Track Record: Realty Income boasts a long history of dividend payments and increases, earning it a reputation as a reliable income-generating investment. The company has a track record of dividend growth, which appeals to long-term investors.
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Investment Strategy: Realty Income employs a disciplined acquisition strategy, targeting properties with stable cash flows and long lease terms. Their focus on essential businesses (e.g., convenience stores, drug stores) positions them well even during economic challenges.
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Relatively Low Cost of Capital: Being a well-established REIT, Realty Income often has access to capital at competitive rates. This enables it to pursue attractive investment opportunities and sustain growth.
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Expert Management Team: Realty Income's experienced management team has a proven track record in real estate investments, giving investors confidence in the company’s strategic direction and operational efficiency.
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Focus on Acquisitions and Growth: Realty Income continuously seeks to expand its portfolio through strategic acquisitions. This growth mindset allows the company to capitalize on emerging investment opportunities while diversifying its income sources.
These competitive advantages combined with a sound operational model help Realty Income maintain a leading position in the REIT sector and attract investors seeking stable income.
Realty Income Corp, known for its monthly dividend payments and focus on net lease properties, faces several risks and challenges in the near future:
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Interest Rate Increases: As interest rates rise, the cost of borrowing increases, and existing properties may face higher refinancing costs. Higher rates can also make other investments comparatively more attractive, potentially leading to lower demand for REIT shares.
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Economic Downturns: A recession could result in higher vacancy rates and lower rental income. Tenants facing financial difficulties might fail to meet lease obligations, impacting Realty Income's revenue.
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Market Saturation: The net lease market has seen increased competition, leading to potential overvaluation of assets and pressure on cap rates. This saturation might limit Realty Income's ability to acquire new properties at favorable terms.
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Tenant Quality and Diversification: Realty Income’s portfolio includes diverse tenants; however, the financial health of specific sectors (like retail or convenience stores) can impact overall performance. A lack of diversification in its tenant mix can expose the company to sector-specific risks.
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Regulatory Risks: Changes in tax laws or real estate regulations can affect the company’s business model. Increased taxes on real estate or changes to tenant rights can alter profitability.
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Environmental and Social Governance (ESG) Concerns: Growing focus on sustainability may require the company to invest in upgrades or renovations to its properties to meet environmental standards, leading to increased costs.
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Debt Levels: Realty Income uses leverage to finance acquisitions. High levels of debt can increase financial risk, particularly in a volatile interest rate environment.
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Geopolitical Risks: Global economic and political instability may have indirect effects on tenant stability and overall market conditions, influencing Realty Income's performance.
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Technological Disruption: The rise of e-commerce can impact brick-and-mortar retailers, which may in turn affect the rental income Realty Income receives from commercial tenants.
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Inflation Risks: While many leases include inflation escalators, significant inflation could lead to higher operational costs, reducing margins and impacting profitability.
Understanding these risks is crucial for evaluating Realty Income Corp's future performance and making informed investment decisions.
Revenue & Expenses Breakdown
Realty Income Corp
Balance Sheet Decomposition
Realty Income Corp
Current Assets | 1.3B |
Cash & Short-Term Investments | 442.8m |
Receivables | 788.6m |
Other Current Assets | 59m |
Non-Current Assets | 66.8B |
Long-Term Investments | 1.2B |
PP&E | 51.5B |
Intangibles | 11.7B |
Other Non-Current Assets | 2.4B |
Current Liabilities | 1.8B |
Accrued Liabilities | 1.2B |
Other Current Liabilities | 634.6m |
Non-Current Liabilities | 27.5B |
Long-Term Debt | 25.5B |
Other Non-Current Liabilities | 2B |
Earnings Waterfall
Realty Income Corp
Revenue
|
4.7B
USD
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Cost of Revenue
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-342.1m
USD
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Gross Profit
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4.4B
USD
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Operating Expenses
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-2.3B
USD
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Operating Income
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2.1B
USD
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Other Expenses
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-1.3B
USD
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Net Income
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838.4m
USD
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Free Cash Flow Analysis
Realty Income Corp
USD | |
Free Cash Flow | USD |
Realty Income reported a strong second quarter, with AFFO per share growing 6% to $1.06, driven by keen investments in the U.S. and Europe, totaling $805.8 million at an average initial cash yield of 7.9%. The company increased its full-year investment guidance to $3 billion—up 50% from prior guidance—reflecting a growing pipeline of attractive opportunities. With transaction volume rising $200 million sequentially, Realty Income is well-positioned to deliver on its AFFO per share guidance of $4.15 to $4.21 for 2024. Despite headwinds including certain client bankruptcies, the company remains confident in achieving nearly 1% same-store rental revenue growth for the year.
What is Earnings Call?
O Profitability Score
Profitability Due Diligence
Realty Income Corp's profitability score is 53/100. The higher the profitability score, the more profitable the company is.
Score
Realty Income Corp's profitability score is 53/100. The higher the profitability score, the more profitable the company is.
O Solvency Score
Solvency Due Diligence
Realty Income Corp's solvency score is 31/100. The higher the solvency score, the more solvent the company is.
Score
Realty Income Corp's solvency score is 31/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
O Price Targets Summary
Realty Income Corp
According to Wall Street analysts, the average 1-year price target for O is 65.77 USD with a low forecast of 58.58 USD and a high forecast of 73.76 USD.
Dividends
Current shareholder yield for O is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
O Insider Trading
Buy and sell transactions by insiders
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Profile
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Description
Realty Income Corp. is a real estate company, which engages in generating dependable monthly cash dividends from a consistent and predictable level of cash flow from operations. The company is headquartered in San Diego, California and currently employs 367 full-time employees. The firm is focused on acquiring and managing freestanding commercial properties under a long-term net lease agreement. The firm owns and operates diversified portfolio of over 11,000 commercial properties. The firm's properties are leased to clients, operating across 60 industries, and located in 50 United States (U.S) states, Puerto Rico, the United Kingdom and Spain. The majority of its properties are leased to retail clients that have a service, non-discretionary, and/or low price point component to their business. The Company’s property types include Retail, Industrial, and Agriculture.
Contact
IPO
Employees
Officers
The intrinsic value of one O stock under the Base Case scenario is 60.01 USD.
Compared to the current market price of 61.75 USD, Realty Income Corp is Overvalued by 3%.