Realty Income Red Flags: Should You Sell $O Stock?

Realty Income (O) REIT has paid growing MONTHLY dividends for over 20 years in a row. But the "Monthly Dividend Company" has some red flags. Should you sell O stock? Are VICI Properties (VICI), Essential Properties Realty Trust (EPRT), or W.P. Carey (WPC) better options? You can access my entire REIT Portfolio by taking a 2-week free trial to my REIT newsletter, High Yield Landlord: https://seekingalpha.com/checkout?service_id=mp_1268

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Realty Income (O) has a great year in 2022. It managed to grow its AFFO per share by nearly 10%, which is far better than its historic average. This is mainly because it managed to acquire $9 billion worth of real estate - a new record for the company. But its growth will slow down significantly in 2023. It has guided to grow its cash flow per share by just 1.5%, a historic low for the company. This means that its cash flow and dividend income will likely not keep up with inflation. Many of its peers are able to grow a lot faster. As an example, Essential Properties Realty Trust (EPRT) has guided for 5% FFO per share growth in 2023, which is 3x more than Realty Income's growth rate. The reality is that Realty Income is getting too big for its own good, spreads on new investments are historically low, and its rent hikes are not keeping up with the inflation.

Lower growth + higher valuation = lower total returns going forward.

Image sources: Realty Income, NAREIT, YCHARTS, Canva

Important Disclaimer: Leonberg Capital OÜ is long O, EPRT, WPC, and VICI. This video is impersonal and does not provide individualized advice or recommendations for any specific person. Viewers/readers should not make any investment decision without conducting their own due diligence and consulting their financial advisor about their specific situation. This video is for entertainment purposes only and you are responsible for your own investment decisions. The information is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The opinions expressed are those of the publisher and are subject to change without notice. This YouTube channel is managed by Leonberg Research OÜ, a subsidiary of Leonberg Capital OÜ.

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