drewtalksmoney

Realty Income is a popular REIT that has accumulated industry experience for the past 56 years. The company currently manages and leases over 15 600 properties for clients in 89 industries.

The 2024 results are positive

Realty Income has reported a 4.8% increase in AFFO per share for 2024. The AFFO is often used to assess the financial performance of REITs and used to determine a company’s ability to pay back dividends to investors. This marks the 14th consecutive year of growth for the company.

The company has also maintained a high portfolio occupancy rate of 98.7% and distributed attractive dividends back to investors. Realty Income has also invested substantially amount of capital with high ROI of 7.4%, increasing cash flow.

Though the 2025 forward guidance is quite disappointing

Firstly, the AFFO per share guidance for 2025 implies a mere 1.4% rate of expected growth. This company expects to see many large office tenants moving out. $21 million worth of profits from non-recurring lease will also terminate in 2024 and will therefore be missed out in 2025.

The uncertain interest rate landscape will also prove to be challenging and will weight heavily on the company’s cost of debt. For example, $4.5bn worth is debt will mature in 2026. In the high interest environment brought about by the Trump administration, it is important to keep investment volume rolling.

I believe the company remains a strong investment due to its reliable dividends and strong performance. The average price target sits at an upside of 10% at the $60 mark. Any weaknesses in the share price will provide a good buying opportunity.