Forget Share Price Hype: This Monthly Dividend Stock Fits Warren Buffett’s 10-Year Test
We just published our list of the 10 Stocks I Am Retiring On, and Realty Income Corporation (NYSE:O) ranked 8th on the list.
A retirement portfolio needs businesses that can keep rewarding shareholders long after the current market narrative fades. Dividends show how important those quieter sources of return can be: according to S&P Dow Jones Indices research cited in our coverage of Dividend Aristocrat stocks, dividends have accounted for roughly 31% of the S&P 500’s total return since 1926, with capital appreciation accounting for the remaining 69%. In the 1940s and 1970s, dividend income accounted for more than half of total returns. The lesson is not that every retirement investment must pay dividends, but rather that long-term shareholder gains can come from sources other than rising share prices.
Warren Buffett offers a useful test for that level of dedication. He has advised investors to buy only what they would “perfectly happy to hold if the market shut down for 10 years.” Rather than relying on the potential to sell tomorrow, investors should consider how much the underlying business may make over a decade. That business-owner perspective is the common thread running through Insider Monkey’s discussion of Warren Buffett’s best long-term stocks to buy.
For retirement investors, the distinction between a high starting dividend and an increasing dividend is crucial. The S&P 500 Dividend Aristocrats index requires components to have increased dividends for at least 25 years in a row. This is a record that spans numerous economic cycles, though it doesn’t guarantee future growth. Insider Monkey’s analysis of dividend growth stocks to buy and hold in 2026 looked at 68 such companies and evaluated their five-year average dividend growth rates.
Of course, financial strength is just as important as payout record. A dividend competes with debt repayments, capital spending, and other financial requirements. Liabilities are broader than debt, but the comparison shows the type of liquidity cushion worth considering alongside dividend yield.
Realty Income made the list after The Motley Fool’s Matt DiLallo named it an anchor for his retirement portfolio and Seeking Alpha’s Leo Nelissen chose it as one of four equities on which he would bet his retirement. With 4.07% short interest and 34 hedge funds owning shares in Q2 2026, it ranked eighth on our list.
Realty Income Corporation owns over 15,000 net leased properties and pays dividends on a monthly basis. Third quarter AFFO increased 3.7% to $1.12 per share and the company updated its outlook for 2026 AFFO to $4.45 to $4.46. Realty Income invested $2.6 billion during the quarter at an initial cash yield of 6.8%, creating a spread of approximately 170 basis points over its cost of capital.
Matt DiLallo highlighted Realty Income as an anchor of his retirement portfolio in his October 2026 article. His case paired sustainable, rising dividends with historically low share price volatility, citing a beta of around 0.5. As he approaches retirement, he seeks assets that can help safeguard his accumulated wealth while also growing it, and he sees Realty Income as a great fit for that goal.
Growth is moderate, hence the yield accounts for the majority of the return. The AFFO outlook implies roughly 4% growth, the GAAP P/E of around 40x is not meaningful enough, and the shares are trading well below their 52-week high of $67.94. Moreover, the average analyst estimate of $62.7 implies a 6.2% gain. The €528 million KKR investment in a European property venture may provide a new source of capital and management fees, but it also transfers a portion of the rental economics to the partner. Whether this increases shareholder returns depends on how profitably Realty Income redeploys the capital. See whether a partner investment can boost returns here.
While we acknowledge the potential of Realty Income as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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