Reuben Gregg Brewer, The Motley Fool

Sun, Jun 29, 2025, 3:37 PM5 min read

• I am an income investor, and my portfolio is filled with iconic dividend stocks.

• If I had to pick one high-yield stock today that would be worth buying and holding over the long term, it would be Realty Income.

• Realty Income isn't exciting in the least, which is exactly why dividend investors like me love it.

• 10 stocks we like better than Realty Income ›

I own a couple dozen stocks. I like each and every one of them, given that I chose them out of the thousands of potential stocks available on Wall Street. Picking just one would be difficult. Yet, given my dividend focus, I would lean toward Realty Income (NYSE: O) today. The reason is partly because of its well-above-market 5.6% dividend yield, but there's much more to like beyond that simple fact. Here's what you need to know.

Realty Income is a net lease real estate investment trust (REIT). It owns single-tenant properties where the tenant is responsible for most property-level operating costs. The purpose of this leasing approach is pretty simple. The tenant effectively retains operating control of the asset, and Realty Income avoids the cost and effort of taking care of the property.

In fact, sale leaseback transactions are used in the net lease world. This means that the seller instantly becomes the lessee, usually with a long-term lease that includes regular rent bumps. It is really a financing transaction for the seller, which raises capital from the sale but still retains that all-important operational control of a vital asset. Realty Income is supplying the capital and getting a reliable tenant with a vested interest in the property. It's pretty close to a win/win transaction.

Realty Income is one of the largest and most diversified net lease REITs you can buy. Its market cap is more than three times the size of its next closest peer's. It owns over 15,600 properties. It has exposure to retail and industrial assets, and its portfolio includes properties in both North America and Europe.

To be fair, Realty Income's size is also a problem to consider. The REIT simply can't grow quickly because it is already so large. So slow and steady is the name of the game. The average annualized dividend growth rate over the past 30 years was roughly 4.1% a year. Thirty years, by the way, is the length of Realty Income's dividend streak. So it is a reliable, though slow-growing, dividend stock.

Buying just one stock really isn't a reasonable expectation, but that doesn't mean you shouldn't own some companies that are foundational investments. For those with an income bias like me, Realty Income offers just such a foundation. It's a risk/reward trade-off, for sure, but one that comes with a very attractive 5.6% dividend yield.