This Robinhood Stock Has a Trailing 5% Dividend Yield -- Is It Too Good to Be True?

Core Viewpoint - Investors should be cautious about high dividend yield stocks, as non-REIT dividend stocks can adjust payments at any time, while REITs must pay out at least 90% of net income in dividends [1] Company Overview - Realty Income (NYSE: O) is a popular REIT known for its monthly dividend payments, offering a 5% yield, significantly higher than the S&P 500 average of 1.2% [2] - The company owns over 15,500 single-tenant, net-leased properties, ensuring steady income as tenants cover insurance, property taxes, and maintenance [3] - Realty Income maintains an occupancy rate of nearly 99%, indicating a strong demand for its properties and a solid client base that includes major companies like Home Depot and Dollar General [4] Dividend Analysis - Realty Income pays an annual dividend of $3.24 per share, with a history of increasing its monthly payout at least once per year since 1994, creating expectations for periodic hikes [5] - The company earned $4.20 per share in funds from operations in Q3 2025, allowing it to comfortably cover its dividend payments while retaining cash for other uses [6] - The stock currently trades at over a 20% discount from its all-time high, which has contributed to the higher dividend yield [6] Market Conditions - Recent interest rate cuts by the Federal Reserve are expected to lower credit costs, making real estate deals more profitable, which could lead to increased profits and stock value for Realty Income [7]