Why Fixed Income Investors Should Consider Realty Income as a Core Holding

Fixed income investors seeking reliable dividend income often face a challenging market. While traditional bonds remain an option, Realty Income presents a compelling alternative that deserves serious consideration. This real estate investment trust combines the income stability that fixed income investors crave with genuine growth potential—a rare combination in today’s market.

Substantial Dividend Yield with Proven Payment History

The foundation of any income-focused portfolio rests on reliable yield, and Realty Income delivers on this front. The company’s forward dividend yield exceeds 5.2%—significantly above what most fixed income instruments currently offer. What makes this yield particularly attractive is its sustainability. As a REIT (Real Estate Investment Trust), Realty Income must distribute at least 90% of its taxable income to shareholders as dividends, creating a structural incentive to generate consistent returns.

The company’s financial performance supports this income stream. During the first nine months of 2025, Realty Income recorded net income exceeding $766 million, demonstrating the underlying business quality that fixed income investors require. This isn’t merely high yield chasing; it’s backed by genuine earnings power.

Consistent Dividend Growth Outpacing Inflation

Fixed income investors typically worry about inflation eroding their purchasing power. Realty Income addresses this concern through an exceptional track record of dividend increases. The company has raised its dividend for over 30 consecutive years with a compound annual growth rate of 4.2%—outpacing typical inflation rates.

More impressively, since its 1994 NYSE listing, Realty Income has increased its dividend 133 times, including 112 consecutive quarterly increments. This disciplined approach to dividend enhancement ensures that fixed income investors can maintain and grow their real income over multi-decade holding periods.

Monthly Income Distribution for Predictable Cash Flow

Unlike most dividend-paying stocks that distribute quarterly, Realty Income pays monthly—a feature it has trademarked as “The Monthly Dividend Company.” This monthly distribution schedule appeals strongly to fixed income investors who value predictable, regular cash flow. The company has maintained this payment streak for 667 consecutive months, demonstrating unwavering commitment to investor income.

The psychological and practical benefits for fixed income investors are significant. Monthly payments provide consistent income for portfolio management, reduce the impact of market timing, and create a more stable, predictable income stream than quarterly alternatives.

Remarkable Stability Through Diversified Real Estate Portfolio

Volatility represents the enemy of fixed income investors. Realty Income excels in delivering the stability that income-focused portfolios require. The company has achieved 29 consecutive years of positive operational returns—a testament to consistent business execution.

This stability manifests in stock price resilience. Since 1994, the S&P 500 has experienced declines of 10% or more on 13 separate occasions. During these market downturns, Realty Income’s shares outperformed, declining less than the broader market 11 times and actually rising on three occasions when the S&P 500 fell sharply. The stock’s beta of 0.5 reflects this exceptional stability—moving half as much as the market during volatile periods.

The source of this resilience lies in the company’s diversified real estate portfolio. With over 15,500 properties representing 92 different industries, Realty Income maintains steady cash flow generation capabilities. This diversification shields the portfolio from concentration risk and enables consistent dividend payments regardless of individual sector performance.

Strategic Growth Opportunities in European Markets

While fixed income investors prioritize income stability, many also seek modest capital appreciation. Realty Income provides this upside potential. Since its 1994 listing, the company has generated a compound annual total return of 13.7%, substantially exceeding S&P 500 performance over the full period.

Future growth prospects appear particularly encouraging in European markets. Realty Income estimates its total addressable market at approximately $14 trillion, with Europe representing roughly 60% or $8.5 trillion of this opportunity. The European real estate market remains highly fragmented with numerous small operators, providing Realty Income a clearer expansion pathway than the more consolidated U.S. market.

Additionally, the company is strategically expanding into private capital markets, leveraging its operational expertise to generate recurring fees. This initiative could meaningfully enhance long-term earnings growth and provide fixed income investors with appreciation potential beyond dividend yields.

Consider Your Investment Timeline and Goals

For fixed income investors building core holdings, Realty Income merits serious evaluation. The combination of above-market yield, consistent dividend growth, monthly distributions, and genuine stability creates a compelling profile for those prioritizing reliable income. While recent technology sector outperformance has temporarily overshadowed real estate returns, the fundamental characteristics that attract fixed income investors to Realty Income remain intact and potentially undervalued in the current market environment.