The pursuit of financial independence is, for most, a slow erosion of debt and a cautious accumulation of assets. It is a pragmatic goal, often obscured by the more flamboyant promises of wealth. My own aim for the coming years is simply to generate sufficient passive income to cover basic living expenses – a modest ambition, but one grounded in a clear assessment of reality.
Realty Income (O 0.17%) appears, at first glance, to be a straightforward investment. It is a real estate investment trust (REIT), and its function is to acquire properties and distribute the rental income to shareholders. The simplicity is deceptive, of course, as all financial instruments conceal layers of risk and complexity. However, the basic premise is sound, and the company’s record is, on the surface, unremarkable in a reassuring way.
Realty Income states its intention to invest in properties that provide “dependable monthly dividends that increase over time.” This is not a revolutionary concept, but it is a stated aim, and the company has, for over half a century, consistently delivered monthly dividends. Six hundred and sixty-seven consecutive payments is a figure that demands attention, though it is crucial to remember that past performance is not a guarantee of future results. They have increased their payout 133 times since 1994, including for the last 113 quarters – a consistent, if incremental, growth at a compound annual rate of 4.2%. Such consistency, in a world of volatile markets, is a rare commodity.
The current dividend yield of 5.1% is significantly higher than that offered by the S&P 500 (1.2% yield). This higher yield is not, however, a consequence of increased risk, but rather of the nature of the underlying assets. Realty Income’s portfolio is diversified and generates stable rental income, backed by long-term net leases that place the burden of property operating costs on the tenants. Furthermore, the company maintains a strong financial profile, possessing one of the ten best balance sheets in its sector. This financial strength provides the flexibility to continue expanding its portfolio of income-producing real estate, a crucial factor in sustaining future dividend growth.
It is reasonable to expect that Realty Income will continue to grow its dividend over the coming decades. This expectation is not based on optimism, but on a careful assessment of the company’s fundamentals and its consistent track record. Therefore, I intend to increase my holdings of this quintessential real estate passive income stock in 2026. It is not a spectacular investment, but in a world increasingly characterized by uncertainty, a steady, reliable income stream is a valuable asset indeed.
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2026-02-09 03:02