Realty Income Has Raised Its Dividend 113 Consecutive Times. Here Is Why That Is Not Enough to Own It Right Now

"O trades at a trailing P/E of 55 and a forward P/E of 40, valuations that belong to a growth name, not a net lease REIT carrying 7.91x net debt to EBITDA and only 1.47x interest coverage. The numbers underneath that multiple are deteriorating. EPS missed consensus by 16.05% in Q4 2025, 12.67% in Q3, 44.50% in Q2, and 14.82% in Q1. Interest expense climbed to $1.13 billion in 2025 from $1.02 billion in 2024, and impairment provisions hit $471.3 million for the year. ROIC is negative."

"The 2026 AFFO guide of $4.38 to $4.42 implies 2.8% growth at the midpoint despite a $8.0 billion investment volume guide for the year, a 27% step-up over 2025 deployment. CEO Sumit Roy has conceded that "meaningful upside may take years to materialize." Same-store rent growth is guided at 1.0% to 1.3%, occupancy is set to drift from 98.9% to 98.5%, and the top 20 clients account for 35.8% of base rent. Paying 40 times forward earnings for sub-3% per-share growth, rising leverage, and concentrated tenant risk is the trade-off retirement income buyers are increasingly questioning in exchange for a monthly payment cadence."

"AbbVie raised its quarterly payout 5.5% to $1.73, lifting the annual run rate to $6.92. The quarterly dividend has compounded every year from $0.40 in 2013 to $1.73 in 2026. Starting yield is 3.19%, lower than O's 5.01%, and that is the point. A growing stream funded by expanding earnings outpaces a stretched yield funded by debt issuance."

Realty Income trades at high trailing and forward P/E multiples that resemble a growth stock rather than a net lease REIT. Net debt to EBITDA and interest coverage indicate limited financial cushion, while EPS misses against consensus occur across multiple quarters. Interest expense rises and impairment provisions increase, with ROIC turning negative. Management guidance points to modest AFFO growth, low same-store rent growth, slightly declining occupancy, and meaningful tenant concentration risk. The implied trade-off is paying a high multiple for sub-3% per-share growth amid rising leverage. AbbVie is presented as an alternative with a dividend raised 5.5% to $1.73 per quarter, a lower starting yield, and a dividend history that compounds annually alongside earnings growth.

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