1 Wall Street analyst thinks Realty Income stock will hit $59. Is it a purchase?
Realty Income stock has rebounded from its 2024 lows, but one Wall Street analyst expects more to come.
mizuho Analyst Vikram Malhotra revisits his rating. real estate income (o -0.16%) Last week, the company maintained a Buy rating on the stock and increased its price target for the retail real estate investment trust (REIT) from $56 to $59 per share.
Many investors have stayed away from REIT stocks in recent months. On the surface, high dividend yields make sense because they compete with similarly high yields offered by online savings accounts, certificates of deposit, and bonds. Some REIT stocks have also suffered from concerns about commercial real estate. However, the best time to buy stocks may be when sentiment is negative and stocks are falling.
REITs can also be a growth story
Some investors have already realized that there are compelling reasons to buy Realty Income stock. The stock price recovered from its 2024 low last month. However, Mizuho analysts believe there is more room for upside from Realty’s recent share price of around $55. One reason for this is the subsector in which Realty Income operates.
Triple net rental REITs like Realty Income provide protection by holding tenants responsible for expenses other than rent, including taxes, insurance, and maintenance. Realty also focused on growth, including adding geographic and real estate diversification through the acquisition of Spirit Realty Capital, which closed earlier this year. Recently, a joint venture was established. digital real estate Entering the data center sector. And last year, the REIT announced its first investment in a large casino property in Las Vegas.
The company’s financials remain strong, as it announced its first quarter results on May 6 and said adjusted funds from operations per share beat expectations and increased year-over-year. As it turns out, it continues to pay and increase dividends. And as the Federal Reserve pointed out, if interest rates move lower in the future, investors should flock to dividend stocks like Realty Income. Now it’s time to add it to your portfolio.
Howard Smith has a position at Realty Income. The Motley Fool has positions in and recommends Digital Realty Trust and Realty Income. The Motley Fool has a disclosure policy.
