Where Will Realty Income Stock Be in 1 Year?
Realty Income, a large REIT with 15,500 properties, is facing growth challenges due to its size. Its dividend growth has slowed, with a 2.3% increase in 2025 compared to 3.6% for a smaller competitor. To address this, Realty Income is expanding into Europe and Mexico and developing an asset management business for institutional investors. This new venture aims to create a reliable growth engine, but its impact will be clearer in a year as the company builds its customer base.
Realty Income (O +0.98%) owns 15,500 single-tenant net lease properties. Its portfolio spans across the United States and Europe. Although it is focused on retail assets, it also owns industrial properties and other properties (like casinos). It is a gigantic business, but there's something interesting happening under the surface.
Realty Income is so big that it's slow
Given Realty Income's vast size, it takes massive property acquisitions to move the needle on the top and bottom lines. Smaller net lease REITs have a growth advantage here. As an example, Realty Income's dividend has increased at a roughly 4.2% annualized rate over the past 30 years. However, in 2025, the monthly dividend started the year at $0.264 per share per month and ended at $0.27. That's a tiny increase of just 2.3%.
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To be fair, 2025 was a tough year for REITs. But smaller and faster-growing net lease peer Agree Realty increased its dividend by roughly 3.6% in 2025. On the surface that may not sound like a big difference, but it represents a growth rate that's 50% faster. While Realty Income is built from the ground up to be a slow and steady dividend stock, it knows that the larger it gets, the harder it becomes to grow.
Realty Income is acting on the problem
This is why Realty Income expanded into Europe several years ago. This is why it recently started investing in the Mexican market. And it is why it is using its net lease expertise to build an asset management business geared toward institutional investors.
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Key Data Points
The institutional business is expected to generate consistent fees and builds on the company's existing net lease expertise. The fees are expected to be reliable because institutional investors usually have long time horizons. In other words, Realty Income is attempting to build a new growth engine, similar to what REIT peers Prologis and Ventas have done in their warehouses and healthcare focused businesses, respectively.
This new business line is just being created, and Realty Income has to build its institutional customer base. So there's no way to know how important a business it will be right now. However, in a year, the outlook will be much clearer. And if the potential returns the company is touting prove reasonable, it could be an important long-term opportunity for the REIT and its shareholders.
