Why Realty Income Is a Strong Buy After Q2 2025 Earnings

Realty Income Corporation (O) delivered a solid quarterly performance despite short-term profit pressure. The company reported a solid net income that matched market expectations, supported by resilient operational performance. The company also deployed significant new investments, primarily in Europe, while maintaining balance sheet stability.

Moreover, the high rent recapture rates and consistent dividend growth reflected strong tenant demand and disciplined management. This article presents a financial and technical analysis of Realty Income Corporation to assess its future growth potential and identify investment opportunities for investors.

Realty Income Q2 2025 Earnings Highlight Resilient Financial Growth

Realty Income Corporation released the Q2 2025 earnings on August 6, 2025. The net income for Q2 2025 was $196.92 million. Despite the drop in net income for Q2 2025, the long-term trends for net income show strong growth as seen in the chart below. This growth in profitability is supported by strong leasing activity and disciplined portfolio expansion.

Moreover, the AFFO was $1.05 per share, demonstrating the company’s ability to generate predictable cash flow. The company also increased its investment activity, deploying $1.2 billion at a 7.2% initial cash yield, with 76% of that capital directed toward European assets.

On the other hand, the balance sheet remained stable despite active capital deployment. Realty Income ended the quarter with a net debt to annualised pro forma adjusted EBITDAre of 5.5x. It raised $628.7 million through the settlement of 11.2 million shares via its ATM program and retains forward agreements for another 11.6 million shares.

The company achieved a 103.4% rent recapture rate on re-leased properties, highlighting resilient tenant demand. Management raised the low end of its AFFO guidance to a range of $4.24–$4.28 per share for 2025, backed by solid first-half results and a robust deal pipeline. Additionally, the investment guidance was also increased to $5.0 billion for the full year.

Realty Income Corporation continued to reward shareholders with consistent dividends. The company announced its 111th consecutive quarterly dividend increase, bringing the annualised dividend to $3.228 per share. This performance underscores Realty Income’s commitment to long-term income generation and disciplined capital allocation.

Realty Income’s Portfolio Remains Resilient With High Retention and Strong Rent Recapture

Realty Income ended Q2 2025 with ownership interests in 15,606 properties leased to 1,630 clients across 91 industries. The portfolio remains well-diversified, with a weighted average remaining lease term of nine years.

In Q2 2025, the occupancy stood at 98.6% which reflects stable tenant demand even amid ongoing lease transitions. This high occupancy rate was unchanged from the prior quarter, which demonstrates the strength of Realty Income’s tenant relationships and asset quality.

The company also maintained strong performance in re-leasing activity. During Q2, 355 leases expired, and 293 were re-leased to existing tenants, while 17 were re-leased to new tenants. Vacant dispositions totalled 64 units, leaving 212 properties available for lease at quarter-end.

However, for the six months, the rent recapture rate stood at 103.6%, indicating that newly signed leases were secured at higher rents than the prior agreements. This highlights Realty Income’s ability to preserve and enhance income, even when replacing tenants.

Realty Income’s leasing execution reflects its strategic advantage in owning mission-critical, single-tenant retail and industrial properties. With $96.8 million in new annualised base rent signed in Q2 alone, the company sustained occupancy and also grew cash flows on re-leased units. This strong leasing momentum, combined with a disciplined disposition strategy, positions Realty Income to defend its dividend and deliver steady growth.

Realty Income Expands Liquidity and Grows Rental Revenue

Realty Income posted stable growth in same-store rental revenue during the first half of 2025. For Q2, same-store revenue increased to $1.167 billion, up 1.1% year-over-year. However, for the first half, revenue increased 1.2% to $2.337 billion. This growth reflects strong portfolio performance across 14,622 properties, supported by disciplined lease management and ongoing demand for net-lease assets.

Moreover, the property dispositions continued to generate strong returns. Realty Income sold 73 properties in Q2 2025 for $116.8 million, recording a $38.6 million gain. A total of 128 properties were sold for $209.4 million from January 2025.

These sales have produced $61.1 million in total profits and demonstrate effective capital recycling, allowing the company to exit non-core assets and reinvest in higher-yielding opportunities.

On the other hand, the liquidity remained robust with $5.1 billion in total liquidity at quarter-end. This included $800.45 million in cash, $3.9 billion in revolver capacity, and $422.8 million in proceeds from unsettled ATM stock issuances.

The company also raised over $1.9 billion through senior unsecured notes during the quarter, locking in long-term capital at favourable rates. The expansion of its unsecured credit facility to $5.38 billion further enhances flexibility as the company pursues its $5 billion investment guidance for the year.

Realty Income Presents Long-Term Bullish Base with Breakout Potential

Realty Income Corporation has established a strong long-term bullish structure. The stock surged from a low of $13.80 in March 2009 to an all-time high of $82.23 in February 2020. After reaching that peak, the price corrected sharply to a low of $36.80. This movement formed an ascending broadening wedge pattern, as illustrated by the red dotted trend lines on the monthly chart below.

The stock has continued to trade within this broadening wedge, signalling potential long-term upside. Historically, this pattern has generated key buy signals, first in March 2009, then in March 2020, and again in October 2023.

The stock recently formed a bullish reversal candle after reaching a low of $50.71 in April 2025. Since then, the price has rebounded and is now consolidating near that level, indicating positive price momentum.

A breakout above the $68 level would confirm a bullish continuation and likely trigger a rally toward record highs. The monthly chart also shows a long-term pivotal support line originating from the March 2000 lows. This support line finds strong support in the $29–$30 range. Any deeper correction is expected to see a base in this zone. Therefore, this area is considered a long-term support area. This setup presents a compelling opportunity to accumulate Realty Income at lower levels.

Realty Income Forms Bullish Triangle Pattern with Strong Long-Term Support

To further understand the bullish price action in Realty Income Corporation, the weekly chart below highlights a triangle pattern formed by blue dotted trend lines. The lower trend line represents a 10-year support level that generated strong buy signals in both 2020 and 2023. Following these signals, the stock has been consolidating within a black triangle pattern after forming a bottom in April 2025.

This price action suggests that the stock is currently in a short-term consolidation phase as it prepares for its next move. For investors, the emergence of this pattern following a strong long-term rally since 2008 reinforces the chart’s underlying bullish structure. The formation of higher lows and steady support reflects continued strength in the stock.

Daily Consolidation Supports Bullish Reversal With Upside Target Toward $65

The daily chart below shows substantial consolidation in Realty Income Corporation above the $50 level. This pattern suggests that the price may break above $58. A breakout above this level would confirm a short-term bottom and could trigger a strong move toward the $65 area. Based on this bullish setup, now appears to be a favourable time to invest in Realty Income and hold positions for the long term.

Market Risks

Realty Income continues to face headwinds from uncertainty in interest rates. Although the company secured favourable rates on recent debt, rising borrowing costs could pressure future investment returns. The firm’s net debt to annualised pro forma adjusted EBITDAre stands at 5.5x, indicating limited room for leverage expansion without impacting credit metrics.

While the company boasts a 98.6% occupancy rate, any economic slowdown could strain tenant performance. Realty Income’s extensive portfolio of single-tenant properties is exposed to industry-specific risks.

Realty Income continues to expand into Europe, with 76% of Q2 investments in the region. This increases exposure to currency volatility, regulatory risks, and geopolitical instability. Additionally, reliance on capital markets for ATM issuances and unsecured notes introduces vulnerability to shifts in investor sentiment and market liquidity.

From a technical perspective, the stock is trading within a risky zone where further declines toward the buy zone remain possible. The chart below highlights two phases of growth in Realty Income. The stock has completed phase two in 2020 and is now trading within the red zone.

A breakout above this zone would signal the potential for future growth. However, the price already reached the buy zone near the $40 level in March 2020, suggesting that it may continue to trade higher from the current region.

Why Realty Income Is a Strong Buy at Current Levels

Realty Income stands out as a strong long-term investment. The company maintains stable cash flows, high occupancy, and consistent dividend growth. It continues to grow AFFO, recycle capital effectively, and expand its global footprint. Despite near-term profit softness, its robust leasing activity and disciplined financial management provide strong support for future gains.

The technical setup also favours a bullish outlook. The stock is consolidating above key support levels and shows signs of a breakout above $58. A move above $58 would confirm a new rally phase. Investors can consider buying the stock at current levels and adding more positions if the stock corrects back to the $40-$42. The strong rebound from the 61.8% retracement level near $40 in March 2020 indicates market strength and suggests an upside breakout.