O Dividend Calculator

What Realty Income actually is

Realty Income is a net-lease real-estate investment trust that owns more than fifteen thousand freestanding commercial properties — convenience stores, dollar stores, pharmacies, grocers and other single-tenant retail — leased to tenants on long triple-net terms, meaning the tenant pays property taxes, insurance and maintenance while Realty Income collects rent. It trades under the ticker O, sits in the S&P 500, and has trademarked the nickname "The Monthly Dividend Company" because, unlike almost every other large-cap stock, it pays every month rather than quarterly. That monthly cadence is why this calculator exists as its own page: the compounding rhythm differs from a quarterly-paying ETF even when the headline yield looks similar.

Who tends to reach for it

O shows up most in the portfolios of income-first investors — people who want a payout that lands on a monthly schedule matching monthly bills, and who value a long, uninterrupted distribution record over maximum price appreciation. Realty Income has paid a monthly dividend without interruption since its 1994 listing and has raised it for more than thirty consecutive years, one of only a handful of REITs with a streak that long. The trade-off is worth stating plainly: a ~5.1% starting yield is well above a broad-market index or a dividend-growth ETF like SCHD, but the per-share dividend grows slowly (recent increases run around 3% a year), and a rate-sensitive REIT's share price historically climbs more slowly than the broad equity market. You are buying a larger check today in exchange for slower growth of both the payout and the principal — a legitimate choice for someone who needs income now, but a different question than "how large can this grow," which is why each fund in this cluster gets its own projection.

How DRIP compounds here

With the DRIP toggle on, each monthly distribution buys additional shares, and those shares pay their own dividend the following month — a reinvestment loop that turns twelve times a year rather than four. The metric that captures it is yield-on-cost: the dividends received in a year divided by what you originally put in. Because O starts near a 5.1% yield, yield-on-cost builds from a higher base than a low-yield fund, but it drifts upward more slowly since the per-share dividend grows only modestly. Turn DRIP off and you take the monthly cash instead; the share count stops compounding and the income line flattens sooner. The chart above shows both outcomes as a band rather than a line, because the rate of dividend and price growth over a multi-decade hold is genuinely uncertain.

The tax detail worth knowing

REIT distributions get taxed differently from ordinary stock dividends, and this is the single most important thing to understand before holding O in a taxable account. Because a REIT passes through income it does not pay corporate tax on, most of its dividend is non-qualified — it is taxed as ordinary income at your marginal rate, not at the lower long-term capital-gains rate that applies to a fund like SCHD's qualified dividends. A portion may be reclassified as return of capital or capital gain each year, and the Section 199A deduction can shelter part of the ordinary portion, but the base case is that O's income is taxed harder than a qualified-dividend payer at the same yield. That is why REITs are frequently held inside a Roth or traditional IRA, where the monthly distribution reinvests without an annual ordinary-income bill. The Account toggle above models this: the default taxable projection taxes O's distribution as ordinary income — with the §199A deduction on the eligible slice and return-of-capital deferring basis — before reinvesting, while a Traditional IRA or Roth compounds it untaxed. Switch it to see how much the account choice is worth at your bracket.