Shares of the real estate investment trust (REIT) Realty Income (O -2.77%) slipped about 2.8% as of 11:44 a.m. ET after the company reported its fourth-quarter earnings results.
Realty Income reported adjusted funds from operations (AFFO) of $1.05, in line with consensus Wall Street analyst estimates on FactSet. REITs are a bit different from most companies because they buy and invest in real estate and must pay out at least 90% of their taxable income in dividends to obtain REIT status, which comes with certain tax advantages. AFFO measures cash generated by a business and is a key metric followed by REIT investors. Revenue at Realty Income of $1.34 billion beat consensus estimates.
However, management guided for AFFO to come in between $4.22 and $4.28 in 2025, falling short of the $4.30 average estimate by Wall Street analysts. During the quarter, Realty increased its quarterly dividend for the 109th straight time. Monthly dividends will increase 2.5% to $3.126. Realty's dividend yield is now at a whopping 5.78%.
Despite the miss on guidance, I still like Realty Income's strategy of investing in real estate leased to clients mainly in non-discretionary, low-price, service-oriented, and non-retail businesses like Home Depot, BJ's, and FedEx, just to name a few. The company is also seeing opportunities in the growing data center and gaming markets. While management executes its strategy, investors can sit back and enjoy a strong and growing dividend.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.