Realty Income(O) The Motley Fool·2025-01-15 10:45Performance and Market Context - Shares of Realty Income declined by 7% in 2024, underperforming the S&P 500 which rallied 23 3% [1] - The REIT's total return was negative 2 1% compared to the S&P 500's 25% return when including reinvested dividends [1] Impact of Interest Rates - Higher interest rates increased borrowing costs and weighed on the value of real estate, negatively affecting REIT stock prices [2] - The Federal Reserve's interest rate policy shift and stubbornly high inflation caused the market to anticipate higher rates for longer, impacting Realty Income's performance [6] Financial Performance and Growth - Realty Income grew its adjusted FFO by about 5% in 2024, exceeding initial expectations [4] - The company completed a $9 3 billion acquisition of Spirit Realty and increased its full-year investment guidance from $2 billion to $3 billion [4] - Investment volume in 2024 was around $3 billion, down from more than $9 billion in 2023 and 2022 due to higher capital costs [5] Dividend and Valuation - Realty Income delivered its 128th dividend increase since going public in 1994, marking the 109th consecutive quarter of dividend growth [6] - The REIT enters 2025 with a lower valuation and a higher dividend yield of about 6% [3] Strategic Initiatives and Outlook - Realty Income plans to address interest rate headwinds by tapping into private capital markets and launching a fund to enhance returns on invested capital [7] - The REIT expects to grow its adjusted FFO per share by 4% to 5% annually, potentially producing total returns above 10% over the long term [3] - Despite challenges, the company remains a compelling investment opportunity for income-seeking investors due to its growth prospects and dividend yield [3]