Skip to main content
No. of Recommendations: 5
From Seeking Alpha contributor and Reitster, Brad Thomas:


Realty Income's portfolio is highly exposed to physical real estate. However, we’re not talking about malls and shopping centers.

Its performance in recent years has been solid. And, looking forward, we expect to see similar mid to high single-digit growth.

Realty Income has outperformed its peers, as well as the major market averages, by a wide margin.


Realty recently declared its 596th consecutive monthly dividend, which means it’s been paying a monthly dividend for nearly 50 years. And that’s despite it only being a public company now for 25.

As a result of that “official” quarter-century of not only doling out dividends but also raising it, the stock was added to the S&P 500 Dividend Aristocrats Index last quarter.

Still, Realty Income, is quite pricey these days:

In the $80 area, O’s forward-looking price to FFO multiple – using the mid-point of its 2020 guidance – is 23x. And its forward-looking P/AFFO multiple is 22.7x.

These figures result in 40%+ premiums to Realty’s 20-year average in the 16x range. And they result in a 20%+ premium to the 10-year average P/FFO ratio in the 18.9x range.

Essentially, our fair value estimate of $65 implies that Realty Income is overvalued by roughly 23% right now.

Read on:

Morningstar estimates fair value at $65, too, and has a one-star "sell" price of $87.75.

Long O
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.