Is It Too Late to Buy Realty Income Stock?

Realty Income (NYSE: O) has increased its dividend annually for 29 consecutive years. The current yield is around 5.8%, which is significantly more than you could get from an S 500 index fund and above the 4.1% on offer from the average real estate investment trust (REIT) (using Vanguard Real Estate Index ETF (NYSEMKT: VNQ) as a proxy). And yet the stock is down 20% over the past year, offering investors an opportunity to jump aboard this strong dividend payer.

It is important to understand what's going on with Realty Income that has investors worried. There are really two big points. First, the rapid rise in interest rates used to combat inflation has had a material impact on the REIT's business. That's not unique to Realty Income; every company that makes use of leverage is basically facing the same headwind.