JPMorgan Cuts Realty Income to Underweight
Key Points
- JPMorgan downgraded Realty Income to Underweight while keeping a $61 price target.
- The downgrade comes as part of a broader reshaping of JPMorgan’s 2026 REIT outlook.
- Realty Income continues to grow internationally, with Europe now nearly 18% of rent.
- Despite the rating cut, Realty Income has a long record of frequent dividend increases.
JPMorgan shifts stance on Realty Income
On Dec. 18, JPMorgan downgraded Realty Income Corporation to Underweight from Neutral, while maintaining its price target at $61. The change was part of the bank’s broader 2026 outlook for real estate investment trusts, in which it issued two upgrades and seven downgrades across the group. The analyst described the moves as resulting in a “more stratified ratings distribution,” signaling a more differentiated view among REITs. Realty Income, which trades on the NYSE under the ticker O, is also cited among high-paying monthly dividend stocks, but now faces a less favorable rating from JPMorgan within the sector context.
Dividend profile and payout track record
Realty Income is widely known for its monthly dividend strategy, which features frequent but often very small increases. These raises can be as little as a fraction of a cent, but they occur regularly and accumulate over time. On Dec. 9, the company lifted its monthly dividend by 0.2% to $0.27 per share. Over the long term, Realty Income has increased its dividend annually for three decades and has raised the quarterly payout 112 times. The company has trademarked the nickname “The Monthly Dividend Company” to underscore its focus on dividend reliability. In the third quarter of 2025, its adjusted funds from operations payout ratio was about 75%, a level presented as consistent with its net lease REIT model and relatively low operating cost structure.
Scale, portfolio mix, and financial strength
Realty Income is described as one of the largest REITs globally, with a market capitalization of about $52 billion and a portfolio of more than 15,500 single-tenant properties. Roughly 80% of these assets are retail-focused. The company operates with an investment-grade rated balance sheet, which, combined with its size, provides broad access to capital markets for both problem-solving and growth funding. The diversified nature of the portfolio means no single property is expected to have a material impact on overall performance, and retail assets are characterized as relatively easy to buy, sell, or re-lease as needed.
International expansion and shifting returns
Historically concentrated in the United States, Realty Income began expanding internationally in 2019 with the purchase of 12 U.K. properties leased to grocery chain Sainsbury’s. Since then, Europe has become a more significant contributor to results. As of the most recent quarter cited, 17.7% of the company’s contractual rent came from Europe and the U.K. Realty Income invested $1 billion in European properties in the last quarter alone, exceeding the $889 million deployed in the second quarter and $893 million in the first quarter. New European assets are generating an initial weighted average cash yield of 8%, compared with about 7% for new U.S. properties. Overall, the company now owns free-standing, single-tenant commercial properties across the U.S., the U.K., and six other European countries, reflecting a broader geographic footprint that is influencing its return profile.
Long-term growth backdrop amid rating change
Despite JPMorgan’s downgrade, the articles highlight Realty Income’s long-term growth record. Revenue has risen from $49 million in 1994 to $5.27 billion in 2024, an increase of 10,657%. The combination of scale, access to capital, a long history of dividend growth, and ongoing international expansion is presented as the backdrop against which the new Underweight rating is being applied. While some commentary contrasts Realty Income with other investment ideas, including certain AI stocks, the core developments center on the REIT’s evolving portfolio, its dividend practices, and how these factors are being reassessed within JPMorgan’s updated REIT outlook for 2026.
Key Takeaways
- JPMorgan’s Underweight rating places Realty Income on the less favored side of its newly stratified 2026 REIT outlook, even as the bank keeps its $61 target.
- Realty Income’s long record of steady, incremental dividend growth and a 30-year annual increase streak remains a central feature of its investment profile.
- The REIT’s rapid expansion into Europe, with higher initial cash yields than new U.S. assets, is reshaping its geographic mix and return characteristics.
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