Scott Heins
Summary
- Realty Income Corporation investors were likely stunned as O collapsed toward the lows last seen in October 2022, giving up the gains it built up in 2023.
- The downward spiral in O is likely linked to the recent surge in the 10Y Treasury yield, as investors braced for a still-hawkish Fed, pricing in prolonged interest rate headwinds.
- Realty Income’s robust business model suggests that its dividend payouts aren’t expected to be at risk. As such, I expect income investors to return and defend the recent hammering.
- I make the case for why O’s battering could be peaking as the market has priced in further weakness, worsened by the challenge facing the commercial real estate market.
- Maintain Buy, but investors shouldn’t expect a rapid recovery as seen in October 2022. Patience is much appreciated.
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Realty Income Corporation (NYSE:O) investors have suffered another meltdown, as the selling carnage forced a battering that took O back toward lows last seen in October 2022.
As such, despite posting a robust second-quarter or FQ2 earnings release in early August, investors weren’t amused, as the yield-driven volatility is back to haunt O holders. As a reminder, I highlighted such an opportunity in October 2022, as the capitulation created a highly remarkable setup that was hard for dip buyers to miss. Accordingly, O bottomed out in mid-October before buyers returned in force with a spectacular recovery toward its January 2023 highs.
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