The S&P 500 Shows Resilience Despite Tariff Concerns

If there was ever a moment to believe in the market’s resilience, now’s a good one. After dropping into what looked like it might become a bear market, the S&P 500 has slowly inched up, despite the continued potential threat of the new tariff program.

However, this does not guarantee another crash won’t occur or that there won’t be negative impacts. Given the unpredictable nature of the market, it’s crucial for all investors to consider safe stock options.

Realty Income: A Solid Investment Option

Realty Income (NYSE: O) stands out as a particularly strong choice. Regardless of market fluctuations, it consistently offers a high-yielding and growing dividend. Its business model is also tariff-resistant, making it more appealing during uncertain economic times.

Realty Income is a real estate investment trust (REIT) focused on the retail industry. The company owns about 15,600 properties worldwide and has ample cash and credit to acquire more. Its diverse portfolio includes not only essential retailers but also has expanded into new regions and sectors. While 80% of its properties are retail, over 14% are within industrials. The U.K. has emerged as a significant market, representing more than 11% of its holdings, with EG Group, a British retail firm, as its fifth-largest tenant.

Benefits of a Tariff-Resistant Model

The focus on large, established retail chains provides stability, especially during economic downturns. These companies, such as Walmart and Home Depot, are likely to fulfill rental obligations even when their revenues are squeezed, thriving when conditions improve. Despite potential price increases due to tariffs, essential purchases like groceries remain constant.

Additionally, with interest rates declining, Realty Income can more easily enhance its credit and acquire additional properties globally. The company estimates a global addressable market of $14 trillion and has identified $43 billion in opportunities for 2024. Realty Income’s growth comes through purchasing properties and acquiring smaller REITs, both of which require significant capital—capital that is cheaper to obtain now.

Consistent Dividend Payments for Over 54 Years

Realty Income has maintained a remarkable record by paying monthly dividends for over 54 years, even prior to its public offering in 1994. This amounts to 658 consecutive months of dividends, a rare achievement in the market. Moreover, the company has raised its dividends for 110 consecutive quarters.

Typically, Realty Income’s dividend yields around 5%, more than three times the average S&P 500 dividend yield. Given the current challenges in the real estate market, Realty Income’s stock price has declined, resulting in a current yield of 5.6%. An investment of $18,000 in Realty Income today could generate $1,000 in annual dividends paid monthly, with growth expected over time as dividends increase.

Is Realty Income a Worthwhile Investment Today?

Before committing to an investment in Realty Income, consider the following:

The analyst team at Motley Fool Stock Advisor has identified what they believe are the 10 best stocks for potential investment, and Realty Income did not make the list. The stocks that did could generate significant returns in the years ahead.

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Jennifer Saibil has positions in Walmart. The Motley Fool has positions in and recommends Home Depot, Realty Income, and Walmart. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.