Stock Analysis: Realty Income

By Fredrik Arnold

Tuesday, February 14, 2023 8:32 PM EST

real estate letter blocks

Image Source: Unsplash

Realty Income Corp bears the ticker symbol O, and this is my first mention of Realty Income Corp for this new Viking Portfolio or any of my previous seven dog of the week folios.

Realty Income owns roughly 11,700 properties, most of which are freestanding, single-tenant, triple-net-leased retail properties.

Its properties are located in 49 states and Puerto Rico and are leased to 250 tenants from 47 industries.

Recent acquisitions have added industrial, office, manufacturing, and distribution properties, which make up roughly 17% of revenue.

Founded in 1971, the company pays dividends monthly, is organized as a REIT, and is headquartered in San Diego, CA.

Three key data points gauge

Realty Income Corp, or any dividend-paying firm:

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether any company has made, is making, and will make money.

O Price

Realty Income Corp's price per share was $65.69 at Monday's market close. In the past year, O share price fell by $1.80, or about 2.7%.

If O stock trades in the range of $50.00 to $80.00 this next year, its recent $65.69 share price might reach $70.00 by next year. That upside estimate of $4.31 is about $0.72 below the median of one-year target prices from 16 analysts.

O Dividends

Realty Income Corp's most recent monthly dividend of $0.2485 casts a forward annual yield of 4.54%.

O Returns

Adding the $2.98 annual estimated

Realty Income Corp dividend to the one-year price upside estimate of $4.31 reveals a $7.29 potential gross gain estimate per share.

At Tuesday’s $65.69 closing price, a little over $1000 would buy 15 shares.

A $10 broker fee (if charged), paid half at purchase and half at sale, might cost us about $0.66 per share.

Subtract that maybe $0.66 brokerage cost from my estimated $7.29 gross gain makes a net gain of $6.63 X 15 shares = $99.45 for a 9.4% net gain including the 4.54% annual dividend yield.

In the next year our $1K investment in shares of Realty Income Corp would generate $45.40 in cash dividends. However, a single share of O stock at Tuesday’s $65.69 price is over $20 greater than the estimated annual dividend income from our $1000.00 investment.

So, by my dogcatcher ideal, this is NOT the proper pullback time to buy Realty Income Corp shares, based on their dividends for 2023. The current dividend from $1K invested is 30% lower than the O single share price. Consider yourself alerted.

Wait for O price per share to drop below $54.60.

All of the estimates above are speculation based on the past history of investment in shares of Realty Income Corp. Only time and money invested in this stock will determine its future market value.

More By This Author:

Stock Analysis: Armada Hoffler Properties
Current Report: SL Green Realty Corp (SLG)
Stock Analysis: Bayerische Motoren Werk

Disclosure: This article was compiled by Rydlun & Co., LLC from data derived from www.ycharts. com; www.finance.yahoo.com; analyst median target price by YCharts.

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