Buffett Brain · Research note
Score updated 21 May 2026
O· Real Estate
Realty Income
Realty Income's high P/E of 49.4 and EV/EBIT of 53.9 signal an overvaluation despite a consistent dividend history.
Buffett fit
Partial fit
Owner
49
Durability
79
Management
43
Price
22
Score updated 21 May 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Real Estate stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned Realty Income entirely, our focus would be on maintaining the stability of rental income to support dividend payouts.
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Realty Income shows durability with a 5-year profitable track record and a 7.69% EPS CAGR.
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Realty Income's shows a high share count increase of 21.55%, indicating dilution.
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The valuation appears stretched with a of 49.4 and an EV/ of 53.9, while the earnings yield is only 2.03%.
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- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1Consistent dividend history with 608 consecutive monthly dividends.
- 2Dividend yield of 5.29% provides steady income.
- 3Real estate portfolio spans over 6,500 properties, offering diversification.
- 4Interest coverage of 5.9 indicates ability to meet debt obligations.
Concerns
5- 1High ratio of 49.4 suggests overvaluation relative to earnings.
- 2EV/ of 53.9 indicates expensive operational valuation.
- 3Share count CAGR of 21.55% points to significant dilution.
- 4Net debt/EBITDA of 7.28 signals high risk.
Price history
$56.34-18.9%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Realty Income operates as a REIT, generating cash flow from over 6,500 real estate properties under long-term leases. Its revenue model is primarily rental income, supporting a dividend yield of 5.29%. The company has a consistent history of dividend payments, with 608 consecutive monthly dividends declared. The unit economics hinge on maintaining high occupancy rates and stable rental agreements.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 21, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Real Estate
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