O
O
Hold 2026-05-04
Model
DDM
Price at Report
$63.45
Base IV
$65.47
Bear IV
$59.26
Bull IV
$68.12
Entry Zone: 55-60 · Sell Above: 72
Bore Family Office
Valuation Report — Realty Income Corporation (O) • May 4, 2026
3-Stage DDM (Ke) • Discount Rate: 7.50% • Current Price: $63.45
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Realty Income Corporation (NYSE: O), known as "The Monthly Dividend Company," is the largest net-lease REIT in the S&P 500 with over 15,500 properties across 89 industries in the U.S., U.K., and Western Europe. The company acquires and manages freestanding commercial properties under long-term triple-net (NNN) leases where tenants pay property taxes, insurance, and maintenance — producing highly predictable rental cash flows. Top tenants include 7-Eleven, Walgreens, Dollar General, FedEx, and Walmart. Realty Income has increased its dividend for 31+ consecutive years and declared 113 consecutive quarterly increases since its 1994 NYSE listing.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Retail (Free-Standing) | $4,550M | 79% | +9.0% | — | NNN retail; grocery, convenience, dollar stores |
| Industrial | $887M | 15% | +25.0% | — | Logistics/distribution; fast-growing segment |
| Gaming | $178M | 3% | +5.0% | — | Bellagio/Encore sale-leaseback; high rent yield |
| Other | $134M | 2% | +3.0% | — | Office, mixed-use, other |
| Blended Growth Rate | — | 100% | +11.2% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Maturity/Stability: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| FCF Margin | 67.2% | ≥10% strong |
| Debt / EBITDA | 5.4x | >5x elevated |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $2,080 | $3,344 | $4,079 | $5,271 | $5,749 |
| Rev YoY Growth | — | +60.7% | +22.0% | +29.2% | +9.1% |
| Gross Margin | 93.6% | 93.2% | 92.2% | 92.8% | 92.5% |
| EBITDA ($M) | $1,644 | $2,939 | $3,516 | $4,194 | $4,622 |
| EBITDA Margin | 79.0% | 87.9% | 86.2% | 79.6% | 80.4% |
| Operating Income ($M) | $746 | $1,269 | $1,621 | $1,799 | $2,098 |
| Operating Margin | 35.8% | 38.0% | 39.7% | 34.1% | 36.5% |
| Net Income ($M) | $1,360 | $869 | $872 | $848 | $1,059 |
| Net Margin | 65.3% | 26.0% | 21.4% | 16.1% | 18.4% |
| EPS (diluted) | $0.87 | $1.42 | $1.26 | $0.98 | $1.17 |
| Free Cash Flow ($M) | $1,303 | $2,468 | $2,890 | $3,452 | $3,863 |
| Annual DPS | $2.845 | $2.969 | $3.059 | $3.133 | $3.219 |
| Total Debt ($M) | $16,751 | $19,490 | $22,927 | $27,863 | $30,289 |
💹 Capital Return & Share Count Analysis
Net Share Change
+236.3% (2017→2025)
📈 Net dilution — issuances exceed buybacks
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2017 | 273.5M | — | — | — |
| 2018 | 289.9M | +6.0% | — | — |
| 2019 | 316.2M | +9.1% | — | — |
| 2020 | 345.4M | +9.2% | — | — |
| 2021 | 414.8M | +20.1% | — | — |
| 2022 | 612.2M | +47.6% | — | — |
| 2023 | 693.0M | +13.2% | — | — |
| 2024 | 866.0M | +25.0% | — | — |
| 2025 | 919.9M | +6.2% | $47 | 0.1% |
Realty Income is a serial share issuer. Shares outstanding grew from 274M (2017) to 920M (2025), driven by the VEREIT merger (2021), Spirit Realty merger (2024), and ongoing ATM equity programs. Buybacks are minimal — management prefers external growth through acquisitions. This is typical for REITs distributing >90% of taxable income (must issue equity to fund growth). Per-share dilution has been the primary headwind to AFFO/share growth despite strong total AFFO growth.
⚙️ Ke (DDM)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.33% | 10-yr US Treasury yield |
| Beta (β) | 0.760 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 4.2% | Damodaran US ERP |
| Cost of Equity (Ke) | 7.50% | Ke = Rf + β × ERP |
📈 DDM Scenarios
$59
🔴 Bear
$65
📊 Base
$68
🚀 Bull
$63.45
Current Price
$67
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.5% | 2.0% | 7.50% | $59 | ▼6.6% |
| 📊 Base | 2.5% | 2.0% | 2.5% | 7.50% | $65 | ▲3.2% |
| 🚀 Bull | 3.0% | 2.5% | 2.5% | 7.50% | $68 | ▲7.4% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.315 | $3.084 | $3.08 |
| Year 2 | Stage 1 | $3.381 | $2.926 | $6.01 |
| Year 3 | Stage 1 | $3.449 | $2.776 | $8.79 |
| Year 4 | Stage 1 | $3.518 | $2.634 | $11.42 |
| Year 5 | Stage 1 | $3.588 | $2.499 | $13.92 |
| Year 6 | Stage 2 | $3.642 | $2.360 | $16.28 |
| Year 7 | Stage 2 | $3.697 | $2.228 | $18.51 |
| Year 8 | Stage 2 | $3.752 | $2.104 | $20.61 |
| Year 9 | Stage 2 | $3.808 | $1.986 | $22.60 |
| Year 10 | Stage 2 | $3.866 | $1.876 | $24.47 |
| Terminal | — | TV=$71.69 | PV(TV)=$34.78 (59% of IV) | $59.26 |
| Intrinsic Value | — | — | PV(Divs) $24.47 + PV(TV) $34.78 | $59.26 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $71.69. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $34.78). Intrinsic value = PV of all dividends ($24.47) + PV of terminal value ($34.78) = $59.26 per share.
Base Scenario
Stage 1: 2.5% | Stage 2: 2.0% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.331 | $3.099 | $3.10 |
| Year 2 | Stage 1 | $3.415 | $2.955 | $6.05 |
| Year 3 | Stage 1 | $3.500 | $2.817 | $8.87 |
| Year 4 | Stage 1 | $3.587 | $2.686 | $11.56 |
| Year 5 | Stage 1 | $3.677 | $2.561 | $14.12 |
| Year 6 | Stage 2 | $3.751 | $2.430 | $16.55 |
| Year 7 | Stage 2 | $3.826 | $2.306 | $18.85 |
| Year 8 | Stage 2 | $3.902 | $2.188 | $21.04 |
| Year 9 | Stage 2 | $3.980 | $2.076 | $23.12 |
| Year 10 | Stage 2 | $4.060 | $1.970 | $25.09 |
| Terminal | — | TV=$83.23 | PV(TV)=$40.38 (62% of IV) | $65.47 |
| Intrinsic Value | — | — | PV(Divs) $25.09 + PV(TV) $40.38 | $65.47 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $83.23. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $40.38). Intrinsic value = PV of all dividends ($25.09) + PV of terminal value ($40.38) = $65.47 per share.
Bull Scenario
Stage 1: 3.0% | Stage 2: 2.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $3.348 | $3.114 | $3.11 |
| Year 2 | Stage 1 | $3.448 | $2.984 | $6.10 |
| Year 3 | Stage 1 | $3.551 | $2.859 | $8.96 |
| Year 4 | Stage 1 | $3.658 | $2.739 | $11.70 |
| Year 5 | Stage 1 | $3.768 | $2.624 | $14.32 |
| Year 6 | Stage 2 | $3.862 | $2.502 | $16.82 |
| Year 7 | Stage 2 | $3.958 | $2.386 | $19.21 |
| Year 8 | Stage 2 | $4.057 | $2.275 | $21.48 |
| Year 9 | Stage 2 | $4.159 | $2.169 | $23.65 |
| Year 10 | Stage 2 | $4.263 | $2.068 | $25.72 |
| Terminal | — | TV=$87.39 | PV(TV)=$42.40 (62% of IV) | $68.12 |
| Intrinsic Value | — | — | PV(Divs) $25.72 + PV(TV) $42.40 | $68.12 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.50%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $87.39. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $42.40). Intrinsic value = PV of all dividends ($25.72) + PV of terminal value ($42.40) = $68.12 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.5% | $88 | $97 | $109 | $126 | $151 |
| 6.0% | $78 | $85 | $93 | $105 | $121 |
| 6.5% | $70 | $75 | $82 | $90 | $101 |
| 7.0% | $64 | $68 | $73 | $79 | $87 |
| 7.5% | $58 | $62 | $65 | $70 | $76 |
| 8.0% | $54 | $56 | $60 | $63 | $68 |
| 8.5% | $50 | $52 | $55 | $58 | $61 |
| 9.0% | $47 | $48 | $50 | $53 | $56 |
| 9.5% | $44 | $45 | $47 | $49 | $51 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/AFFO | EV/EBITDA | Div Yield | AFFO Growth | Notes |
|---|---|---|---|---|---|---|
| Realty Income | O | 14.9× | 5.4× | 5.12% | ~2.8% | Largest NNN REIT; monthly dividend |
| NNN REIT | NNN | 14.8× | 9.0× | 5.25% | ~2.5% | Peer NNN; smaller, single-tenant retail |
| VICI Properties | VICI | 13.6× | 10.5× | 5.57% | ~6.0% | Gaming/experiential REIT; higher growth |
| STORE Capital | STOR | 13.0× | 10.8× | 6.15% | ~2.0% | Middle-market NNN; higher yield |
| W. P. Carey | WPC | 13.5× | 11.2× | 5.00% | ~1.5% | Diversified NNN; recently restructured |
| O — 5yr Average | — | 16.5× | 11.2× | 4.80% | ~3.0% | Historical average; currently below |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $3.250 |
| Current Yield | 5.12% |
| Consecutive Growth Years | 31 |
| 1-yr DPS CAGR | +2.7% |
| 3-yr DPS CAGR | +1.7% |
| 5-yr DPS CAGR | +2.5% |
| 10-yr DPS CAGR | +3.2% |
| Payout Ratio (DPS/EPS) | 277.2% ⚠️ |
| FCF Payout Ratio | 75.2% |
| Sustainability Verdict | Safe |
AFFO payout ratio of 75.2% is healthy for a net-lease REIT. 31-year consecutive increase streak with 113 consecutive quarterly raises. Dividend well-covered by AFFO; risk is growth rate deceleration, not coverage.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $0.87 | — | — | — | Actual |
| 2022 | $1.42 | — | — | — | Actual |
| 2023 | $1.26 | — | — | — | Actual |
| 2024 | $0.98 | — | — | — | Actual |
| 2025 | $1.17 | — | — | — | Actual |
| 2026 | $1.13 | $1.16 | $1.21 | 14 | Estimate |
| 2027 | $1.15 | $1.18 | $1.24 | 12 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.1B | — | — | — | Actual |
| 2022 | $3.3B | — | — | — | Actual |
| 2023 | $4.1B | — | — | — | Actual |
| 2024 | $5.3B | — | — | — | Actual |
| 2025 | $5.7B | — | — | — | Actual |
| 2026 | $5.3B | $5.5B | $5.7B | 14 | Estimate |
| 2027 | $5.5B | $5.6B | $5.8B | 12 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Brent Dilts | UBS | Strong Buy | $72 | +13.5% |
| Brad Heffern | RBC Capital | Buy | $70 | +10.3% |
| Nicholas Yulico | Scotiabank | Buy | $69 | +8.7% |
| Zhiger Kurmet | Freedom Broker | Hold | $69 | +8.7% |
| Richard Hightower | Barclays | Hold | $68 | +7.2% |
| Haendel St. Juste | Mizuho | Hold | $68 | +7.2% |
| Jay Kornreich | Cantor Fitzgerald | Hold | $68 | +7.2% |
| James Kammert | Evercore ISI | Hold | $67 | +5.6% |
| Ronald Kamdem | Morgan Stanley | Hold | $65 | +2.4% |
| Anthony Paolone | JP Morgan | Sell | $61 | -3.9% |
| Wells Fargo | Wells Fargo | Hold | $60 | -5.4% |
💡 Investment Thesis
- Income compounder with 31-year streak: 113 consecutive quarterly dividend increases through every cycle since 1994 — one of the most reliable income streams in public markets.
- Scale advantage: 15,500+ properties across 89 industries provide unmatched diversification; no single tenant exceeds 3.3% of rent (7-Eleven). The Spirit Realty merger expanded scale and geographic reach without disrupting the dividend.
- A- credit rating: Only a handful of REITs carry S&P A-; this enables lower borrowing costs and accretive external growth even when smaller peers are sidelined.
- Monthly dividend appeal: One of very few S&P 500 companies paying monthly, creating a structural yield advantage for income investors and supporting persistent demand.
- Key risk — rate sensitivity: REITs with 75%+ AFFO payout and 5%+ yields are rate proxies; O traded down ~15% during the 2022 rate cycle. Dividend growth has slowed to ~2%/yr (from 3–5% historically), and AFFO/share dilution from share issuance is an ongoing concern.
👔 Management Quality & Culture
CEO: Not identified · Tenure: Since 2015 (~11 yrs)
Net Insider Buys (12m)
+178,306 shares
Incentive Alignment
❓ Unclear
CEO Background & Track Record
Company Leadership | Realty Income
Hourihan has over thirty years of experience in real estate investment and portfolio management, including being the founding Portfolio Manager of CBRE’s U.S. Core Partners Fund, growing the fund to over $10.0 billion in as
Hourihan has over thirty years of experience in real estate investment and portfolio management, including being the founding Portfolio Manager of CBRE’s U.S. Core Partners Fund, growing the fund to over $10.0 billion in as
Realty Income Corporation (O) Leadership & Management Team A
Realty Income's CEO is Sumit Roy, appointed in Nov 2015, has a tenure of 10.33 years. total yearly compensation is $15.25M, comprised of 6.6% salary and 93.4% bonuses, including company stock and options. directly owns
Realty Income's CEO is Sumit Roy, appointed in Nov 2015, has a tenure of 10.33 years. total yearly compensation is $15.25M, comprised of 6.6% salary and 93.4% bonuses, including company stock and options. directly owns
Sumit Roy, Realty Income Corp: Profile and Biography - Bloom
Sumit Roy is President/CEO at Realty Income Corp. See Sumit Roy's compensation, career history, education, & memberships.
Sumit Roy is President/CEO at Realty Income Corp. See Sumit Roy's compensation, career history, education, & memberships.
Employee Ratings
Overall Rating
3.0/5 ★★★☆☆
Reviews
,
Culture Signal
Positive
✅ Strengths
- work-life balance
- recommend
Employee Review Excerpts
Realty Income Reviews (69): Pros & Cons of Working At Realty
Oct 21, 2025 · Anonymous employee · Current employee, less than 1 year · Recommend · CEO approval · Business Outlook · Pros · Half day Fridays and Monday + Friday WFH · Cons · Cubicle corposlop office, they sat me next to absolutely nobody
Oct 21, 2025 · Anonymous employee · Current employee, less than 1 year · Recommend · CEO approval · Business Outlook · Pros · Half day Fridays and Monday + Friday WFH · Cons · Cubicle corposlop office, they sat me next to absolutely nobody
Working at Realty Income Corporation: Employee Reviews | Ind
Reviews from Realty Income Corporation employees about Realty Income Corporation culture, salaries, benefits, work-life balance, management, job security, and more.
Reviews from Realty Income Corporation employees about Realty Income Corporation culture, salaries, benefits, work-life balance, management, job security, and more.
Realty Income "people" Reviews | Glassdoor
How satisfied are employees working at Realty Income?51% of Realty Income employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Realty Income 3.0 out of 5 for work life balance, 3.4 for
How satisfied are employees working at Realty Income?51% of Realty Income employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Realty Income 3.0 out of 5 for work life balance, 3.4 for
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DDM Verdict: Hold — Realty Income Corporation (O)
Current price: $63.45 | Analyst Avg PT: $66.86
$59
🔴 Bear
$65
📊 Base
$68
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$60 | Begin position |
| Tier 2 — Add | ≤$58 | Add on weakness |
| Tier 3 — Full | ≤$55 | Full allocation |
| Sell Alert | ≥$72 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Hold. At $63.45, Realty Income trades close to our base-case DDM intrinsic value, offering limited upside to fair value. The 5.1% yield is well-supported by 75% AFFO payout and an A- credit rating, but 2%/yr dividend growth and rate sensitivity cap the total return profile. Existing holders should collect the monthly dividend; new buyers should wait for $58–60 (yield >5.5%) for a more attractive entry.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 4,086 |
| Average Cost Basis | $54.16 |
| Current Market Value | $259,257 |
| Unrealized P&L | $+37,959 (+17.2%) |
| Annual DPS | $3.250/yr |
| Annual Dividend Income | $13,280/yr |
| Current Yield (at price) | 5.12% |
| Yield on Cost | 6.00% |
| vs Target (~$200K) | $259,257 / $200,000 (130%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| DDM Base | Using DPS of $3.25 (current annualized monthly dividend). AFFO/share is $4.28 (FY2025) with 75.2% payout ratio — dividend is well-covered. DPS is the correct DDM base for REITs with consistent monthly dividends and 31-year growth streak. |
| Ke Build | Ke = 4.33% (Rf) + 0.76 (β) × 4.17% (implied ERP) = 7.50%. The implied ERP of 4.17% (rather than standard 5.5%) reflects O's defensive NNN lease structure, A- credit rating, and position as the largest net-lease REIT in the S&P 500. Market-implied Ke ≈ 7.62% (from DPS/P + g). Our 7.50% is slightly below, recognizing the monthly dividend premium and institutional demand floor. Sensitivity tested from 6.0% to 10.0%. |
| Growth Assumptions | Base: g1=2.5%, g2=2.0%, gT=2.5%. Anchored to FY2026 AFFO guidance of $4.38–$4.42 (~2.8% growth at midpoint). Dividend growth has slowed to ~2%/yr (from 3–5% historically), reflecting larger base and share dilution from equity issuance. Terminal 2.5% is appropriate for a mature, 31-year aristocrat with A- credit — below long-run nominal GDP (4–5%) but above inflation. |
| Share Dilution | O is a persistent share issuer — shares grew from 274M (2017) to 920M (2025). Most dilution came from VEREIT (2021) and Spirit Realty (2024) mergers. This explains why AFFO grew strongly in total but only ~2–3%/yr per share. The DDM models DPS growth directly, which already captures dilution effects. |
| Sanity Check | Base IV of ~$65 calibrated to analyst consensus PT of $66.86 (within 2%). P/AFFO of ~14.9× is in line with NNN peers (NNN at 14.8×, VICI at 13.6×). O trades at a slight premium to VICI (gaming REIT, higher growth) and at par with NNN, reflecting O's monthly dividend, larger scale, and A- credit rating. |
| REIT-Specific Notes | EPS payout ratio of 277% is misleading — depreciation inflates the denominator. AFFO payout of 75.2% is the correct metric. Used REIT-adjusted quality scorecard (mpl_reit=True) which shifts Debt/EBITDA red threshold from 4× to 5×. O's 5.4× Debt/EBITDA is moderate for a large-cap REIT. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.