The Best High-Yield Dividend Stock to Invest $10,000 Into Right Now
May 24, 2025
Key Points
It takes money to make money.
The good news is that if you have a big chunk of money to invest, you can
potentially
make a lot of money on that investment.
That's if you chose the right investment.
Realty Income
(NYSE: O)
has been
a great
investment
over the years
. The real estate investment trust (
REIT
) has steadily grown its earnings and dividend during its three decades as a public company. That has enabled it to
create
a lot of value for its shareholders.
The REIT is in an excellent position to continue making money for its shareholders in the future. Because of that, it's an ideal stock to buy if you have a lot of money to invest, especially if you want to generate income from your investment.
A wealth-creating machine
Realty Income has
a very simple
strategy: Its mission is to invest in places that deliver dependable monthly dividends to its investors that increase over time.
Realty Income owns a diversified portfolio of income-generating commercial real estate (retail, industrial, gaming, and other properties) secured by long-term
net leases
with many of the world's leading companies.
Net leases produce
very
stable rental income because tenants cover all property operating costs, including routine maintenance, real estate taxes, and building insurance.
The REIT's portfolio produces very durable and growing rental income. Since coming public in 1994, the REIT has only had one year when it didn't increase its adjusted funds from operations (
FFO
) per share (2009). However, it has raised its monthly dividend every
single
year (130 times overall and for 110 straight quarters), growing the payout at a 4.3% compound annual rate. That has allowed it to deliver a positive total operational return each year (dividend income yield plus adjusted FFO per share growth rate).
Meanwhile, it has produced an average annual total return of 15.6%. That would have grown a $10,000 investment made when it came public into a lot of money over the years:
The initial shares purchased would be worth over $130,000. Add in dividend income (and
dividend
reinvestment
), and the total value would be over $843,000.
Built to continue growing shareholder value
Realty Income's past success does not guarantee it will produce similar returns
in the future
. It faces headwinds from higher interest rates and tenant defaults. There's also a lot of competition in the sector.
However, the REIT built its business to pay an attractive and growing monthly dividend. That puts it in a strong position to continue
growing wealth for
its shareholders in the future.
The company's dividend alone provides investors with a solid base return. Realty Income currently yields nearly 5.9%, well above the
S&P 500
's
(SNPINDEX: ^GSPC)
sub-1.5% dividend yield. A $10,000 investment would produce almost $590 of dividend income each year at that rate. That's passive income you can spend or reinvest in generating additional dividend income.
That income stream should steadily rise in the future. Realty Income has historically grown its adjusted FFO per share at an average annual rate of around 5%.
It gets
a little bit of
a bump from rent growth.
The main growth driver is new investments.
Realty Income invests billions of dollars each year into additional income-generating properties. It completes
sale-leaseback transactions
with owner-operators, funds build-to-suit development projects, acquires portfolios from other investors, and merges with other REITs.
Last year, Realty Income closed $3.9 billion of property deals and acquired fellow REIT Spirit Realty in a $9.3 billion deal. This year, the REIT expects to invest at least $4 billion in new properties. It has a conservative dividend payout ratio and one of the strongest financial profiles in the REIT sector, giving it lots of flexibility to invest in expanding its portfolio.
The company has a massive investment opportunity set. It has been steadily diversifying its portfolio over the years by investing in new property types (industrial, gaming, and data centers), countries (several European markets), and investment classes (credit investments like real
estate-backed
loans and
preferred equity
).
This strategy has opened new pathways for expansion and increased its total addressable market opportunity to $14 trillion. It also recently launched a private capital fund management platform to tap into the massive $18.8 trillion U.S. private real estate market.
Realty Income's strategy of expanding into new investment verticals has enhanced its ability to continue growing its portfolio, adjusted FFO per share, and dividend. Because of that, it's in an excellent position to continue creating value for its investors in the future.
A top-quality income investment
Realty Income has lived up to its name over the years. The REIT pays a lucrative and steadily rising dividend. It's in an excellent position to continue growing its portfolio, payout, and shareholder value in the coming years. That makes it
a great
stock to buy if you have
some
money to invest right now.
Should you invest $1,000 in Realty Income right now?
Before you buy stock in Realty Income, consider this:
The
Motley Fool Stock Advisor
analyst team just identified what they believe are the
10 best stocks
for investors to buy now… and Realty Income wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when
Netflix
made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation,
you’d have $639,271
!*
Or when
Nvidia
made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,
you’d have $804,688
!*
Now, it’s worth noting
Stock Advisor
’s total average return is
957% — a market-crushing outperformance compared to
167%
for the S&P 500. Don’t miss out on the latest top 10 list, available when you join
Stock Advisor
.
