Realty Income: Stability in Uncertain Times

A new year is approaching, bringing with it the question of which stocks are worth keeping in the portfolio until 2025. Realty Income, a Real Estate Investment Trust (REIT), might be worth considering due to its unique positioning in the real estate landscape. Unlike many other REITs that focus on specific property types such as hotels or office buildings, Realty Income primarily invests in retail spaces. The company owns over 15,000 retail properties in the United States and Europe. In times when e-commerce is growing relentlessly and the need for physical stores seemingly diminishes, this may appear very risky. Given the fact that, according to Coresight Research, over 6,000 stores in the US have already closed this year—a record since the 2020 pandemic—this concern is valid. Nonetheless, 84% of retail spending is still conducted offline, according to the Census Bureau, indicating that brick-and-mortar stores continue to play an important role, even if they are susceptible to changes in consumer behavior. Realty Income, however, boasts an impressive list of tenants, including large, established names like Walmart, 7-Eleven, Wynn Resorts, and Dollar General. These companies not only represent stability but also seek to further expand their market presence, placing Realty Income in a robust position. Although high interest rates pose greater challenges in acquiring new properties and may potentially hinder retail growth, the stable earnings situation of Realty Income remains a significant factor that provides confidence. Whether REITs are a wise investment in 2025 ultimately remains an individual decision, but the positive arguments for Realty Income seem to clearly outweigh the negative ones.