3D·

"The Monthly Dividend Company" reality check

$O (-0.13%) A check on my largest portfolio value

Time for a portfolio reality check. I'm launching a new series in which I'm taking another look at each of my share positions. Not as a theoretical analysis, but with a concrete view from my own portfolio: How is the share doing? What is my strategy? Buy, hold or get out? Today I'm starting with the biggest chunk: Realty Income.

Key data:

  • 194.67 shares in the portfolio
  • Purchase price: 51.58 euros
  • Current price: 48.91 euros
  • Securities account value: 9,520.82 euros
  • Book loss: -519.40 euros / -5.17 %

This is not a disaster, especially with a dividend yield of currently over 5.5%. Nevertheless: time to re-evaluate the share - including the environment, opportunities and risks.


Company profile: Tenants pay, dividends flow

Realty Income is a US REIT with a simple but ingenious business model: buy properties, rent them out to stable tenants on a long-term basis and pay a monthly dividend. The whole thing is based on so-called "triple net leases". This means that the tenants bear the operating, maintenance and tax costs. Realty Income collects the rent.

Tenants include corporations such as Walgreens, FedEx, 7-Eleven, Dollar General and Home Depot. The focus is on non-cyclical sectors. The portfolio comprises over 15,600 properties - primarily in the USA, but also in Europe.

What makes Realty Income special is that the company has been paying a monthly dividend for decades. In total, more than 130 dividend increases have been carried out since the IPO in 1994. There were four increases in 2025 alone. The current annualized distribution is USD 3.23.


Dividend machine with a safety net

The payout ratio is around 75% of AFFO (Adjusted Funds From Operations) - rather conservative for a REIT. At the same time, the occupancy rate is extremely high at 98.7%. Re-lettings are currently generating even higher rents than before (rent recapture rate > 107 %).

What I personally like: Realty Income is sticking to its financial discipline despite acquisitions. The A rating shows that the balance sheet is clean. No REIT is debt-free, but the structure is right here. Properties are not bought blindly, but cash flows are generated and invested sensibly.


Interest rate turnaround, inflation, external pressure

So why has the share price fallen? Quite simply, the interest rate environment has changed dramatically. Real estate values are sensitive to interest rates. Higher interest rates mean: higher refinancing costs, lower valuations, less growth momentum.

In 2022/23, the Fed raised interest rates aggressively. The first rate cut only came at the end of 2024. As long as the "high interest rate mode" continues, REITs will be less in demand - despite good fundamental data.

Realty Income has reacted to this: Investments have been reduced (only around USD 3 billion in 2024 without the Spirit deal), but internal management is being made more efficient. The company is also planning new sources of financing outside the stock market - e.g. private equity funds.


Valuation & DCF model: undervalued at a discount?

I have calculated a conservative DCF model:

  • AFFO growth: 3%
  • Discount rate: 8%
  • Terminal growth: 2%

Result: Fair value between USD 60 and 70. The share is currently trading at around USD 57 - i.e. slightly undervalued.

Historically, the valuation (P/AFFO ~13.5) is also below the long-term average (~17). At >5.5%, the dividend yield is also well above the norm.


Analyst opinions: Cautious optimism

Of 13 analysts, 9 say: Hold. 4 recommend buying. The average target price is USD 61 - around 7 % above the current price. No hype, but solid confidence.


Opportunities & risks at a glance

Opportunities:

  • Extremely stable cash flows thanks to long-term rental agreements
  • Expansion into new asset classes (casinos, data centers)
  • Entry into Europe creates new growth area
  • High credit rating enables favorable financing

Risks:

  • Interest rate environment could be a burden for longer
  • Capital increases are becoming more difficult
  • Retail sector under pressure from e-commerce
  • Economic downturn could impact tenants


My conclusion: solid holding position with cash flow advantage

Realty Income is my largest position for a reason. I don't see a rally here, but a reliable cash flow supplier for many years to come.

Buying more? No, the weighting in the portfolio is already high. Sell? Also no. The dividend is too stable and the company too robust for that.

I hold. And I collect my dividend month after month.

As always, this is not investment advice. I am sharing my own opinion and experience here. Decide for yourself what suits your portfolio.

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18 Comments

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Unfortunately, Realty Income is also in the red for me in terms of price. Unfortunately, I bought too high.

But the dividends have already evened out half of the negative price and I'm simply leaving it in the portfolio. It will soon be balanced out and then the total return will remain positive. I like that.
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@BockaufDividenden Is there a view on getquin that calculates this?
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@opportunity_scout_1519 Phew I don't know exactly, I'm not that concerned with the views here on getquin because I micromanage everything down to the penny in my portfolio performance
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Super contribution ! Thank you 🙏
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Thanks for the contribution. It's on my buy list as soon as I have money again. However, I first realized that with a strong euro not only the share price falls, but also the dividend, even if only in absolute terms😁 A monthly dividend is something nice, at least if you are looking for dividends! Now I just have to read up a bit on withholding tax...
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Right, that's correct. I should take that into account. Thanks for the tip!
You can declare withholding tax in your tax return.
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@SteFinanz to what extent do you declare the withholding tax in your tax return and what exactly do you list? Per PDF of your dividend statements e.g. from Scalable Capital and then you submit that? Would you like to explain this in more detail?
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Thanks for the very informative article. I am also invested, I also like $MAIN, which is not a REIT ;-). Still a nice addition to the pension :-).
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Thank you for your detailed opinion. $O currently has the largest weighting in my portfolio alongside $PEP.

Greetings 👋
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@Chriscoin87 I can absolutely understand that. This monthly dividend is simply a great motivation!
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Very strong contribution!
Looking forward to further stock presentations from your portfolio
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@bbh_saver_ Thank you very much 🙏 I'll be doing that more often now. I will - of course also for myself - take a completely new look at my own portfolio.
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Thanks for your great analysis, I also find $O very exciting, and it is also my largest position. I will also increase $MAIN to the level (even if it is other business models), and then this sector is well covered for me... and monthly dividends are simply a pleasure. I'm also positive about the future share price. It will!
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I'm also thinking about treating myself to 100 shares to generate a monthly cash flow. But I'm always wondering whether I'd be better off investing them in my distributing ETF... :D
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Buy Realty slowly. Also brought a small part (7.9 shares initially) $ARE on board. To raise my immo share in the portfolio towards 10%. You need a bit of courage for this stock in view of the share price, but the figures look solid here too.
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Wait for the FED to cut interest rates or for the dollar to strengthen again, at the latest then Realty will come to life again.
The savings plan is running and at €48 you can also buy another position.

One of my favorite stocks and I'm looking forward to the monthly payments and especially in 10, 20 and 30 years
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Thanks for your post, I see many things the same way you do. Realty Income is also one of my largest positions. I have been buying the stock in a savings plan for about two years and have now accumulated 92 shares.

I currently have a share price loss of €216.76 in euro terms, but have already received €186.64 net in dividends. So the bottom line is that I am € 30.13 in the red.

Things look better in dollars: I made a price gain of $193.91 and received $201.84 in net dividends, so a total gain of $395.74. The monthly dividends are motivating and the savings plan is helping me to build up my position bit by bit.
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