One real estate investment trust (REIT) stock is gaining attention on Wall Street. That may be because it has soared nearly 20% since the end of October. Yet one Wall Street analyst thinks Realty Income(NYSE: O) shares could have another 20% left to run.
Shares of the REIT are rebounding from a decline earlier this fall that brought the stock to its lowest level in nearly four years. But Realty Income subsequently announced two investments that helped spur Wolfe Research analyst Andrew Rosivach to upgrade the stock last week to a price target of $66 per share. That represents a 20% gain from the recent price. Additionally, Exane BNP Paribas analyst Nate Crossett also just upgraded Realty Income and put a $63 price target on the stock.
Growing and diversifying
One catalyst of the recent decline in Realty shares was its announcement on Oct. 30 that it was acquiring fellow REIT Spirit Realty Capital in an all-stock transaction valued at about $9.3 billion. Those assets will compliment Realty's existing portfolio by adding more industrial properties and more geographic diversity.
Two weeks later, Realty announced a new joint venture with Digital Realty for data center development. Realty will hold an 80% equity interest in that venture. Realty management has been working to add more diverse properties as it grows. Earlier this year, the company announced its first investment in a large Las Vegas casino property, too.
A dividend stock to own
The company expects these growth initiatives will allow it to continue to increase its consistently rising dividend. Shareholders have long enjoyed a monthly dividend payment from Realty Income that has consistently increased for decades. Just yesterday, the company announced its 123rd dividend increase since 1994. The REIT yields about 5.5% at the recent stock price.
Wall Street is taking notice that the share price drop has presented investors with an opportunity to potentially see capital gains along with a steady, and growing, income stream. Investors who are paying attention should be taking advantage of that opportunity.
Should you invest $1,000 in Realty Income right now?
Before you buy stock in Realty Income, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Realty Income wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 11, 2023
Howard Smith has positions in Realty Income. The Motley Fool has positions in and recommends Digital Realty Trust and Realty Income. The Motley Fool has a disclosure policy.
