REALTY INCOME CORP (O): what the price requires
At today's price, REALTY INCOME CORP (O) is priced for -4.8% FFO growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/O
Headline
| Field | Value |
|---|---|
| Ticker | O |
| Company | REALTY INCOME CORP |
| Current price | $64.14/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | reit |
| Implied FFO growth | -4.8% |
| Price-to-FFO | 14.8x |
| FFO yield | 6.8% |
Solve inputs: computed at a 8.6% cost of equity with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -2.53σ |
| cohort percentile (of 88 peers) | 47 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 6.61x | 4 | expensive |
| Earnings | 1.36x | 3 | expensive |
| Relative | 1.21x | 6 | expensive |
| Growth | 1.08x | 5 | expensive |
Families that justify the price: Relative, Growth Families that call it expensive: Asset
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $84.49 | 0.76x | yes | FCF base $4.3B, growth 10% (input: historical growth), terminal g 4.0%, WACC 9.2%, 6yr projection |
| DCF Exit Multiple | Growth | $65.67 | 0.98x | yes | Exit EV/EBITDA: 21.6x / 23.6x / 25.6x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $87.88 | 0.73x | yes | P/E 26.91x (blended: static sector reference 35x + trailing (TTM) 15x), scenarios: 22.3x / 26.9x / 31.5x (bear / base = reference held flat / bull), EV/EBITDA 20x |
| Simple DDM | Growth | $52.42 | 1.22x | yes | DPS $3.24, g=2.9% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $59.65 | 1.08x | yes | Stage 1: 4% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $13.05 | 4.91x | yes | BV/sh $41.89, ROE (TTM) 2.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $7.73 | 8.30x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $36.03 | 1.78x | yes | Rev $5.9B, growth 10% (input: historical growth; tapered), Terminal P/S: 6.6x / 8.0x / 9.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $52.08 | 1.23x | yes | FFO/share $4.34, growth 4% (input: historical FFO/share growth, 10y median), PEG=13.33 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $5.73 | 11.19x | yes | BV $41.89 + 5yr PV of (ROE (TTM) 2.9% − Kₑ 9.3%) × BV; BV grows 1.9%/yr |
| Graham Number | Asset | $63.96 | 1.00x | yes | √(22.5 × FFO/share $4.34 × BVPS $41.89) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $54.40 | 1.18x | yes | EBITDA $2.55B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $47.14 | 1.36x | yes | FCF $4081.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $59.91 | 1.07x | yes | FFO/share $4.34 × (8.5 + 2×4.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $38.00 | 1.69x | yes | Revenue $5.92B × sector P/S 6.0x |
| PEG Fair Value | Relative | $25.95 | 2.47x | yes | FFO/share $4.34 × (PEG 1.5 × growth 4.0% (input: historical FFO/share growth, 10y median)) → PE 6.0x |
| Earnings Yield | Earnings | $46.92 | 1.37x | yes | FFO/share $4.34 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | $61.51 | 1.04x | yes | FFO/share $4.34 × 14.2x P/FFO (route cohort median, n=85); FFO $4.05B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 934M |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt (REIT basis) | $25.0b |
| Net debt / FFO | 6.16x |
| Funds from operations (trailing) | $4.1b |
| Share count CAGR (dilution) | 12.0% |
| Burning cash | no |
REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other. Interest expense is not separately reported in the cached statements, so fixed-charge coverage cannot be computed.
Bullet Takeaways
- Realty Income is a triple-net-lease REIT that owns single-tenant properties and collects rent under long contracts, and it pays the dividend monthly: 2025 AFFO was $4.28 per share against a $3.24 annualized dividend, with the company marking its 113th consecutive quarterly dividend increase.
- The biggest risk is the funding model, because growth runs on a share count rising about 12% a year to finance acquisitions, so the spread between the roughly 7.3% yield it buys and its cost of capital has to stay positive.
- What to watch is the acquisition pace and the rate environment: the company invested $6.3 billion in 2025 at a ~7.3% initial cash yield and guided 2026 AFFO to $4.38 to $4.42, so the question is whether external growth keeps clearing its cost of capital.
Bull Case
Start with the bear's strongest objection, because it is worth taking seriously: Realty Income grows by issuing stock, and a share count rising about 12% a year looks like the kind of dilution that erodes per-share value. If the company were issuing equity to buy assets that yield less than its cost of capital, that criticism would be fatal. The data says it is not. In 2025 Realty Income invested $6.3 billion at an initial weighted-average cash yield of roughly 7.3%, and AFFO per share still reached $4.28, with 2026 guidance set higher at $4.38 to $4.42. Per-share cash flow is rising, not falling, which means the equity it issues is buying spreads that more than cover the new shares. The dilution worry only holds if the spread closes; while it stays open, the model compounds.
The portfolio underneath is the steadiest in the sector. Triple-net leases push taxes, insurance, and maintenance onto the tenant, so Realty Income collects rent with minimal operating drag, and occupancy stood at 98.9%, a level it has held through multiple cycles. The diversification is the moat: the company operates as "a single segment" but spans many property types and "clients engaged in various industries," so no single tenant or sector failure threatens the dividend. Scale gives it an acquisition advantage too, the ability to do sale-leaseback deals large enough that smaller REITs cannot compete for them, and increasingly to do them in Europe where cap-rate spreads are wider.
The dividend record is the proof of the model. A 113th consecutive quarterly increase, paid monthly, on a $3.24 annualized rate well covered by $4.28 of AFFO, is the kind of consistency that defines the franchise. With about $4.1 billion of available liquidity, the company can keep funding acquisitions opportunistically. The bull case is that the dilution criticism is answered by rising per-share AFFO, and what remains is the most reliable income compounder in net-lease real estate.
Bear Case
The fragility in this story lives in the capital structure, and it is a structural feature, not a passing risk. Realty Income carries net debt of about 5.4 times annualized EBITDA, a substantial fixed claim, and it depends on continuous access to both debt and equity markets to grow. The filing names the exposure plainly: the company is "exposed to interest rate changes primarily as a result of our c"apital structure, and while "a portion of these risks is hedged," the hedges do not eliminate the cost of refinancing maturing debt at higher rates. A net-lease REIT is, in effect, a leveraged bond portfolio with rent for coupons; when the rate on the liability side rises faster than the rate on new acquisitions, the spread that powers growth compresses.
The equity-funded growth model is the second structural weakness. Issuing shares at a 12% annual pace works only when the stock trades at a level that makes the new equity cheap relative to the assets it buys. If the share price falls, the cost of equity rises, the acquisition spread narrows, and the entire external-growth engine slows at exactly the moment the company most needs it. The model is self-reinforcing on the way up and self-defeating on the way down, which is why net-lease REITs trade so tightly to interest-rate expectations. A higher-for-longer environment is not a one-time hit; it is a persistent headwind to the growth algorithm.
The liquidity picture also carries a disclosure caveat worth noting: net debt could not be cleanly resolved from the corporate debt tags in the filings, because REIT notes and mortgage debt are often tagged outside the standard corporate ladder, and interest expense is not separately broken out in the cached statements. That is a reminder that leverage at a sprawling, acquisitive REIT is harder to pin down than at a simple operating company. The bear case does not require Realty Income to cut the dividend; it requires only that rates stay elevated long enough to keep the acquisition spread thin, which would turn a compounding income machine into a slow grower with a heavy balance sheet and a stock that re-rates lower.
Valuation
A net-lease REIT is valued on the cash its rents throw off, not on GAAP earnings that depreciation distorts, so the right lens is funds from operations. Against trailing FFO of about $4.34 per share, the $60 price (June 27, 2026) works out to roughly fourteen times, close to where the net-lease REIT cohort trades on the same measure. The price is not stretched on the metric that fits the asset class; it sits broadly in line with peers, and notably below where it has often traded relative to its own cash-flow stream.
The pattern across methods splits the way it always does for a REIT. The relative-multiple and growth-based methods justify the price, landing near or above it, while the asset-based methods read it as expensive, but those asset methods are exactly the ones the REIT structure breaks, capitalizing a depreciation-suppressed return on equity of under 3% that has nothing to do with the cash the properties generate. The FFO-multiple lens lands close to the price, and a Graham-style floor on FFO sits just below it. Read on cash flow, the price embeds an unremarkable assumption, consistent with the modest, steady growth the business actually delivers rather than a stretch beyond it.
The decisive factor is the cost of capital, not the multiple. With net debt around 5.4 times EBITDA and growth funded by issuing equity, the value of the stock turns on whether Realty Income can keep buying assets at yields above what its debt and equity cost. The 2025 acquisitions at a 7.3% initial yield cleared that bar; whether 2026 and beyond do depends on the rate environment as much as on management's underwriting. About $4.1 billion of liquidity provides a cushion, but the income story rests on the spread staying positive. The price is reasonable on FFO; the risk is entirely on the funding side.
Catalysts
The 2026 guidance frames the next year. Realty Income set 2026 AFFO to $4.38 to $4.42 per share, up from the $4.28 it delivered in 2025, signaling continued but measured per-share growth. Clearing that range depends on the acquisition pace and the spread holding, which makes the guide a direct test of the external-growth model.
The acquisition engine is the recurring catalyst to monitor. The company deployed $6.3 billion in 2025 at an initial weighted-average cash yield of about 7.3%, spanning U.S. and European deals, while holding portfolio occupancy at 98.9%. The volume and the yield on new investments, quarter by quarter, are the clearest read on whether the spread between what Realty Income buys and what its capital costs remains wide enough to grow AFFO per share.
The dividend cadence and the rate environment are the two ongoing signals. The 113th consecutive quarterly dividend increase, paid monthly on a $3.24 annualized rate, is the franchise marker investors track. Any shift in interest-rate expectations moves both the company's refinancing cost and the cap rates at which it can acquire, so rate moves are the external variable with the most leverage on the forward AFFO trajectory and on how the market prices the stock's yield.
Peer Cohorts (Per Segment, With Filing Citations)
Net lease real estate (single reportable segment) (reported)
- NNN (NNN REIT, INC.)
- (no filing in the citation store)
- WPC (W. P. Carey Inc.)
- (no filing in the citation store)
- ADC (Agree Realty Corporation)
- (no filing in the citation store)
- EPRT (Essential Properties Realty Trust, Inc.)
- (no filing in the citation store)
- FCPT (Four Corners Property Trust, Inc.)
- (no filing in the citation store)
- BNL (BROADSTONE NET LEASE, INC.)
- (no filing in the citation store)
- KIM (KIMCO REALTY CORPORATION)
- (no filing in the citation store)
- BRX (Brixmor Property Group Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Realty Income FY2025 results · Realty Income FY2025 results and 2026 guidance