Realty Income Yields More Than Quintuple the S&P 500. Here's What a $10,000 Investment Produces in Yearly Dividends.
Key Points
Realty Income's forward dividend yield is 5.9%, compared to the S&P 500's yield of just under 1.1%
This real estate investment trust pays its dividends monthly, and has over three decades of consecutive annual dividend growth.
Reality Income offers slower growth in exchange for lower risk, but it's a strong choice for income investors.
At the current share price, Realty Income (NYSE: O) pays a forward dividend yield of 5.9%. This gives it a yield over 5 times that of the S&P 500 (SNPINDEX: ^GSPC), which currently has a forward dividend yield of under 1.1%. As a real estate investment trust (REIT), it is required to distribute 90% of its taxable income to investors as dividends, which explains its unusually high yield.
For income investors willing to accept slower growth in exchange for more dependable returns, it's a strong choice.
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How much does a $10,000 investment in Realty Income generate each year?
Based on Realty Income's current monthly dividend of $0.2715 cents, this REIT pays around $3.26 per share annually. Based on its current share price of $55.76, a $10,000 investment buys around 179 shares. Multiply 179 shares by $3.26, and you get $583.54 per year.
That $583.54 per year, or around $48.63 per month, may not sound like a significant sum, but it could cover small monthly bills, such as streaming subscriptions.
Dividend dependability and trade-offs
Beyond a high yield, Realty Income has a strong track record of dividend growth. This REIT has raised its payout every year since it went public in 1994. As reported in its second-quarter 2026 earnings release, adjusted funds from operations (AFFO), the REIT equivalent of earnings, rose 3.8% year over year. Relative to AFFO, this stock's payout rate is around 74.5%. That may sound high, but it's sustainable, and supports further hikes at a low-single-digit percentage rate.
That said, there are some trade-offs to consider. With payout growth averaging in the low single digits over the past decade, price appreciation is likely to remain modest as well. Also, Realty Income's price performance hinges heavily on interest rate trends. If high interest rates persist, the market may be unwilling to re-rate REITs like Realty Income to higher valuations.
Even so, if your main focus is payouts and dependability, and you're willing to sacrifice potential upside for lower risk, Realty Income could be a strong addition to your portfolio.
Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.