I am bullish on Real Estate Income It offers a combination of high income and growth as well as multiple expansion at relatively low risks.

Realty Income is a real-estate investment company that was created as a REIT. It invests in single-tenant properties across the United States and in the United Kingdom. Monthly dividends are paid to the company, which is supported by cash flows from over 6,700 commercial real property properties that have long-term lease agreements.

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Stärkes

Realty Income has a huge portfolio that includes 6,761 properties and is an industry leader in the space of real estate investment trusts. It is currently valued at $34.5 million and will reach $51 billion by 2021 when it merges into a real-estate operating company, Vereit (NYSE:). It is now focusing its efforts on Continental Europe where the competition is lower for net-lease properties than in the United States.

Recent Results

Realty Income reported a better than expected revenue of $464.3 Million in the second quarter 2021. This was higher than the consensus estimate at $447.4 millions. Net income per share was $0.33 and adjusted funds of operations per share were $0.88, which aligns with the consensus estimate.

The company successfully raised $594.1 million from the sale of common stock and made investments of $1.13 billion in 156 properties and properties under development, including $591.8 million in UK properties (over 50% of the company’s total acquisitions). This compares to the $1.03 trillion investment in real estate in 2021’s first quarter, which saw investments totaling $403 million in the UK.

Realty Income also received 99.4% of the contractual rent during the second quarter. Its theater clients were 98.9%, which is an increase of 4.85% over the quarter before 2021.

The company announced its 2nd quarter 2021 results and raised its 2021 investment guidance to $4.5 billion from $3.25 Billion to $4.5 Billion. In addition, it expects to see occupancy rise above 98% by fiscal year 2021.

Calculating Valuation Metrics

Realty Income’s stock looks pretty reasonably valued right now, as its EV/EBITDA ratio and Price to Adjusted Funds from Operations ratio both indicate the stock is trading close to its historical range. The EV/EBITDA rate is 19.62x right now, compared to the 5.year average of 19.73x. The price to adjusted funds ratio from operations is 17.87x versus its average 5.89x. TipRanks shows the stock chart for Realty Income.

Wall Street’s Take

Realty Income is rated Strong Buy by Wall Street analysts. It has 5 Buy ratings, 1 Hold ratings and 0 Sell ratings over the past three months. A Realty Income average price target of $77.50 places the upside potential at 15.3%.

Summary and conclusions

One of the most powerful REITs is Realty Income. It has a strong track record in generating large returns, income growth and recession resistance. This is a great time to buy shares because the REIT was still able to increase its monthly dividend even during the COVID-19 crisis. It continues to look for ways to grow while trading slightly below historical levels.

Further bolstering the bull case is Wall Street’s overwhelming bullishness on the company, as well as its stellar balance sheet.

Disclosure: Samuel Smith didn’t hold any position at the time this article was published.

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