Realty Income Corp Shares Are Undervalued: A Look at the Company’s Intrinsic Value

Realty Income Corp, or O, is a real estate investment trust (REIT) that is worth considering for investors in search of passive income. This company is known for its monthly dividend payments, and its current dividend yield is a solid 6.13%. However, income isn't the only reason to be interested in Realty Income Corp – this company's shares are currently undervalued according to the discounted cash flow model.

Let's take a closer look at what that means. The discounted cash flow model analyses a company's intrinsic value based on its expected future cash flow and uses that to set a current estimated stock price. Right now, O shares are worth an estimated $68 per share based on their earnings per share (EPS) of 1.34 and a growth rate of 26%. At the current price of $50, this leaves a healthy margin of safety at 26%. Furthermore, the current share price is only 4% above the stock's 52-week low, making it an attractive time to buy.

It's important to note that Realty Income Corp is classified as an REIT – a type of corporation that must pay out at least 90% of its taxable income to shareholders in the form of dividends. Considering the monthly dividend payments that Realty Income is known for, this isn't something that investors have to worry about. In fact, the company's annual dividend per share is currently $3.07. At its current stock price, this provides a yield of 6.13%. In comparison, the average stock in the S&P 500 index yields 1.92%, while other companies in the Retail REITs pay 5.70%.

One of the key benefits of dividend investing is the power of compound interest. When investors reinvest their dividends, the balance of their investment grows exponentially over time. By doing this with Realty Income Corp, investors can take advantage of the higher yield and watch their investment grow.

With Realty Income Corp, investors get the best of both worlds: an attractive yield from a solid company that also has strong growth potential. The company's monthly dividend payments make it an ideal investment for people in search of passive income, while the discounted cash flow model produces a solid estimate of the stock's intrinsic value. The company is also an excellent candidate for dividend reinvestment and compound interest. Overall, Realty Income Corp presents a great buying opportunity for investors who want to build a strong and reliable investment portfolio.

Disclosure: we are data scientists, not financial advisors. Please do due diligence when investing.