Key Points

• Realty Income boasts an occupancy of almost 99% due to a steady stream of income from reliable tenants.

• It has increased its dividend at least once per year since it went public in 1994.

• The stock is not as expensive as its P/E ratio indicates.

• 10 stocks we like better than Realty Income ›

When an investor buys a stock, the last thing they want is for that new pick to start falling. It’s difficult emotionally to see a position immediately sink to a loss, and to realize that if you’d waited, you could have gotten a better price. But it’s more important to remember that nobody can reliably time the market, and that trying to is actually a losing strategy.

Since it is unlikely that you will consistently buy stocks at cyclical lows, if you’re a dedicated investor, experiencing a drop of 10% or more shortly after you buy won’t be unusual.

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One key to managing that type of disappointment is to stick to stocks in which you have long-term conviction. Personally, I have held shares of Realty Income (NYSE: O) in my portfolio for some time. And over the past month, that stock has slumped by about 10%. However, if I didn’t already own it, I would still invest $5,000 in it today, and here’s why.

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Realty Income’s business

Realty Income is a real estate investment trust (REIT) that specializes in single-tenant commercial properties typically used for retail purposes. Under its net-lease agreements, the tenant is responsible for paying the property’s maintenance, insurance, and taxes, ensuring a steady stream of revenue for Realty Income.

It owns approximately 15,600 properties and boasts an occupancy rate of almost 99%. Since it leases to established retail heavyweights such as Walmart, Dollar General, and Tractor Supply, it benefits from a reliable tenant base.

Moreover, Realty Income has paid a monthly dividend since it went public in 1994. It even went so far as to trademark the phrase “The Monthly Dividend Company.” Additionally, because it has raised its annual payouts at least once per year, it has a 32-year streak of dividend increases.

That dividend, now about $3.25 per share annually, yields about 5.4% at the current share price, an attractive prospect when fewer and fewer S&P 500 stocks yield over 4%. As of this writing, $5,000 will buy about 90 shares, which will generate about $293 in annual dividends.

A payout like that can take a lot of the sting out of a short-term loss of stock value. When investors benefit from a steady income stream, they have an added incentive to hold on and wait for a stock to recover.

Realty Income by the numbers

Realty Income is now down by about 18% from its 52-week high in March, and off 8% over the past 12 months. Rising interest rates are likely to blame for the sell-off. As an owner and purchaser of real estate, the company has to refinance debt periodically, and with rates headed higher, it faces increased expenses and, by extension, reduced profits.

However, Realty Income has improved its financials despite this headwind. In the first half of 2026, revenue increased by 11% from year-ago levels to $3.1 billion. Also, net income surged by 47% to $656 million.

That leaves Realty Income with a sustainable dividend. Its funds from operations (FFO) — one of the preferred metrics for gauging a REIT’s profits — was $4.27 per share over the trailing 12 months. That was well above the current $3.25-per-share dividend.

Yet investors may also be balking at its P/E ratio, which, at 41, makes the stock appear expensive. Still, its price-to-FFO ratio is just 13. Hence, prospective shareholders might want to consider buying before more investors come to recognize how much of a bargain Realty Income stock actually is.

Moving forward with Realty Income stock

Investors should consider buying Realty Income stock if they have $5,000 available, and they should hold on even if the stock drops 10% after they pick it up.

Nobody likes to lose money on stocks. Nonetheless, since the market is nearly impossible to time, even promising investments may end up underwater when they are new additions to your portfolio. Additionally, even if that down period lasts, investors will still generate monthly income, giving them an added reason to hold.

Moreover, its numerous clients keep nearly all of Realty Income’s properties occupied, making it likely that it will continue to grow its portfolio of properties and raise its generous dividend, even in a rising-interest-rate environment. Considering the REIT’s financials, a $5,000 investment in Realty Income should be a winning move regardless of what happens with the stock in the near term.

Should you buy stock in Realty Income right now?

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Will Healy has positions in Realty Income. The Motley Fool has positions in and recommends Dollar General, Realty Income, Tractor Supply, and Walmart. The Motley Fool recommends the following options: short October 2026 $35 calls on Tractor Supply. The Motley Fool has a disclosure policy.