Quick Read
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Realty Income's ~5.40% dividend yield now sits just 40 basis points above the 5.00% 10-year Treasury, its slimmest cushion in years.
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Jim Cramer warned: "If you think the 10 year is headed to 6%, then Realty Income is not worth a second look."
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KKR joined Realty Income in a euro-denominated joint venture, giving O a path to grow without relying entirely on public equity.
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Realty Income( NYSE:O ) reports third-quarter results, expected Monday, November 2, after the close. With the 10-year Treasury at 5.00%, this report tests whether "The Monthly Dividend Company" can keep growing cash flow as capital gets more expensive.
Raised Guidance Runs Into a 5% Treasury
Last quarter, AFFO per share rose 3.8% to $1.09, and revenue of $1.55B beat the $1.44B consensus. GAAP EPS of $0.37 missed the $0.4227 estimate, weighed down by $54.2 million in impairments. Management raised 2026 AFFO guidance to $4.44 to $4.45 and lifted its investment target to $10.0B.
Rates turned less friendly after that. The 10-year peaked at 5.31% on October 5 before falling. Realty Income kept raising capital, closing a $1.0 billion convertible notes offering in August and announcing a euro-denominated joint venture with KKR( NYSE:KKR ) in September. Shares are up 3.5% over the past month and 5.55% year to date.
Wall Street Expects Higher EPS on Flat Revenue
| Metric |
Consensus |
Prior Year |
YoY Change |
|---|---|---|---|
| Q3 2026 EPS |
$0.4347 |
$0.35 |
+24.2% |
| Q3 2026 Revenue |
$1.447B |
$1.471B |
-1.6% |
| FY 2026 EPS |
$1.5074 |
$1.17 |
+28.8% |
| FY 2026 Revenue |
$5.78B |
$5.75B |
+0.6% |
Revenue has beaten estimates in every quarter in the available history. I put more weight on AFFO, the metric REIT investors actually track.
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Investment Spreads and Leverage Take Center Stage
Investment yields are my first focus. Realty Income targets roughly a 150-basis-point spread over its cost of capital, and Q2 deals closed at a 7.3% initial cash yield. CEO Sumit Roy called cap rates a "trailing variable" and warned that "in a highly elevated cost-of-capital environment, cap rates will need to adjust." If acquisition yields fail to rise with the 10-year, spreads shrink.
Leverage comes next. Net debt to EBITDAre rose to 5.4x from 5.2x. So far this year, new debt priced at a blended 3.9% coupon, slightly below the 4% on maturing debt. You should ask whether that advantage lasts a full quarter of 5% Treasuries.
Updates on the $6B hyperscale data center venture and the private capital funds are also worth tracking, as they let Realty Income grow without leaning entirely on public equity. Occupancy slipped to 98.8%, still above the ~98.5% guidance, while the tenant watch list sits in the high-5% area.
Dividend's Cushion Over Bonds Is Getting Thin
Realty Income just declared its 136th monthly dividend increase, yet its ~5.40% yield now stands close to a 5.00% Treasury. Jim Cramer put it bluntly: "If you think the 10 year is headed to 6%, then Realty Income is not worth a second look." Reaffirmed guidance and steady spreads would show the dividend story still works when bonds compete for the same income investors (if you want more names that pay on the same monthly schedule as O, we rounded up seven of our favorites in a free report here).
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