Realty Income Stock: Dividend vs AFFO, Lease Expirations, Debt

The monthly dividend against AFFO, quarter by quarter

Realty Income pays monthly and raises quarterly. Its own count, in the second-quarter release: the June 2026 increase was the “115 th consecutive quarterly dividend increase,” the 135th since its 1994 NYSE listing, and it has declared 673 consecutive monthly dividends. The table puts each quarter's cash dividends against the AFFO the company reports per diluted share. AFFO is a non-GAAP measure that the company defines; the last column is the annualized dividend the company states at each quarter end.

Three readings of that table that the quote pages do not make.

The raises are small and the payout is not falling by much. The monthly dividend was $0.2700 in January to March 2026, $0.2705 in April to June, and $0.2710 declared in July. Each step is $0.0005 a month, or $0.006 a year (0.2%). Full-year payouts, as the company states them, were 74.6% of AFFO in 2024 ($3.126 against $4.19) and 75.2% in 2025 ($3.217 against $4.28). The company says the Q2 2026 figure was 74.5%; we get 74.4% because we use the $0.8115 it prints in the income statement, not the $0.812 in the text. The releases also round AFFO per share to the cent; on the unrounded diluted AFFO of $1,024.5 million over 937.3 million shares ($1.0929, our arithmetic) the Q2 payout is 74.3%, and the 3.8% growth the company reports is about 4.3% unrounded ($1.0929 against $1.0480).

Q1 2026 had a one-off. The 10-Q's rental revenue note shows lease termination income of $40,198 thousand in Q1 2026 and $1,020 thousand in Q2, against $921 thousand and $1,847 thousand in the same quarters of 2025. The AFFO reconciliation in the Q2 release has no line removing it, so we assume it is inside AFFO. On that assumption, AFFO per share without termination income was about $1.09 in Q1 2026 and $2.18 for the half, against $2.10 a year earlier (our arithmetic: 3.4% growth, against the reported 5.2%). The raised 2026 guidance of $4.44-4.45 AFFO per share assumes $45-50 million of termination income, up from $30-40 million in February. That is about $0.013 a share of the roughly $0.045 increase in the midpoint (our arithmetic, on 937 million shares).

GAAP earnings do not cover the dividend, and for a REIT that is normal. Net income was $0.70 per share for the first half of 2026 against $1.6215 of dividends paid, because real estate depreciation was $1.36 a share in the same period. What the dividend leans on is operating cash flow: $2,019.6 million in the first half against $1,514.8 million of cash distributions to common stockholders, 1.33 times (our arithmetic; 1.28 times a year earlier). After distributions, AFFO left $265.3 million in Q2 and $564.9 million in the half to fund investments. The 10-Q is plain about what it does not promise: “we cannot guarantee that we will maintain our current level of dividends, that we will continue our pattern of increasing dividends per share, or what our actual dividend yield will be in any future period.”

What changed in the filings over seven quarters

The earnings releases give the same portfolio statistics every quarter, so the drift is visible. All but the last column come from the release for that quarter.

What stands out:

• Lease term shrinks by about 0.1 year every quarter. From 9.3 to 8.6 years in six quarters. New acquisitions in Q2 2026 averaged 10.7 years of term, so buying is not keeping pace with the clock on the existing book.
• Occupancy is stable at about 98.7%, but the release shows the churn behind it. In Q2, 480 properties had leases expire; 385 went to the same client, 34 to a new client and 45 were sold vacant, and properties available for lease or sale rose from 172 to 188. New rent on re-leased units was $110.3 million against $107.4 million before.
• Impairments, which AFFO excludes, fell. The 10-Q puts the decrease down mainly to larger impairments recorded in 2025 on properties leased to clients in bankruptcy. The weighted average cap rate used to value impaired properties in Q2 was 8.6%. Provisions for credit losses on loans and financing receivables were $46.4 million in the first half, up from $20.3 million, “primarily due to initial expected credit losses on loans acquired during the period.”
• Interest is growing as fast as revenue. Q2 interest expense was $312.1 million against $283.8 million (up 10.0%); total revenue was $1,547.7 million against $1,410.4 million (up 9.7%) (our arithmetic).
• Two new private-capital structures were built in 2026. The U.S. Core Plus Fund (an open-end private fund that Realty Income consolidates; it owned about 26.8% of the limited partner interests at June 30 and 23.6% after a July 1 capital call) and a March 31 joint venture with Apollo, which paid $1.0 billion in cash for 49% of a venture holding 492 net lease properties Realty Income contributed. Noncontrolling interests rose from $685.3 million to $2,384.5 million in six months. The property count went from 15,511 at December 31, 2025 to 15,588 at June 30 while $5.3 billion (at 100%) was invested.

Lease expirations: 23.6% of rent through 2029

Realty Income's 10-Q prints a lease-expiration table by year, excluding the client's option to extend. These are the contractual end dates of the leases, not vacancies, and the percentage is of annualized base rent (ABR), which the company defines as pro-rata contractual monthly base rent times 12 at the balance sheet date, excluding percentage rent and loan income.

Reading it:

• Through 2029: $1,247.2 million, 23.6% of ABR (our arithmetic: 78.2 + 308.9 + 407.3 + 452.8). Through 2031 it is $2,076.9 million, 39.3%. After 2034, 40.4% of rent is on leases that run to 2035 or later, a figure that includes $1.0 billion on leases ending 2041 to 2143.
• The near buckets shrank in a quarter because leases were dealt with, not because dates moved. On the same basis, the 2026 bucket was $116.5 million (2.2%) at March 31 and $78.2 million at June 30; 2027 went from $352.2 million to $308.9 million (down 12.3%, our arithmetic), and the through-2029 share from 25.7% to 23.6%. That is the churn described above: renewals, re-leases and sales.
• Do not compare these figures with the 10-K's. The 10-K for 2025 defines annualized base rent as “the monthly cash base rent for all leases in place as of the end of the period, multiplied by 12, excluding percentage rent.” The 2026 10-Qs define it as Realty Income's pro-rata share, and a footnote to the same tables says the pro-rata basis “deducts noncontrolling interests,” the outside investors' share of the consolidated fund and joint ventures. At December 31 the 10-K showed $5,310.5 million with 3.0% expiring in 2026; at March 31 the same measure on the new basis was $5,225.2 million. On the new basis ABR rose 1.1% in Q2 ($5,225.2 million to $5,280.4 million, our arithmetic) while $2.6 billion was invested at 100%.
• The table says nothing about whether rent resets down. The 102.7% recapture rate in Q2 and 103.0% in the half are the evidence the company gives for that: new rent of $183.5 million against $178.2 million on the units re-leased in the first six months.

Who pays the rent: clients, industries, Europe

The 10-Q lists the 20 largest clients at 34.8% of ABR (35.3% at March 31, 2026, on the same basis). Percentages are calculated independently, so they do not add.

Dollar General and Family Dollar together are 5.9% of ABR (our arithmetic), and the 10-Q's industry table puts dollar stores at 6.0% and drug stores at 4.1%. By industry the biggest are grocery (11.1%), convenience stores (9.4%), home improvement (6.4%) and dollar stores (6.0%). By property type, retail is 78.3% of ABR, industrial 16.2%, gaming 3.1% (two properties, Wynn and the Bellagio interest) and other 2.4%. The “other” bucket includes 15 office properties ($33.4 million), 21 country clubs ($28.0 million), 27 agriculture properties ($35.8 million) and three data centers ($25.0 million).

Europe is now one-fifth of the rent. Adding the nine country rows in the geographic table gives 20.5% of ABR at June 30, 2026 (our arithmetic): the United Kingdom 15.0%, Spain 1.6%, Italy 1.1%, Ireland 0.8%, Poland 0.6%, France 0.5%, the Netherlands 0.5%, Germany 0.3% and Portugal 0.1%. At March 31, 2026 the same nine rows were 20.3%, with the United Kingdom at 14.9%. The 10-K, on the old base, showed the United Kingdom at 14.3% and the countries that print a number at 18.8%, with Germany and Portugal under 0.1% each. Europe was $1.68 billion of the $5.3 billion invested in the first half. In the U.S., Texas is 9.5% of ABR, Florida 4.7% and California 4.4%.

Debt: $31 billion, 3.9% on average, and what comes due

At June 30, 2026 total debt excluding deferred financing costs was $30,990.6 million and net debt $30,437.9 million, 5.4 times annualized pro forma adjusted EBITDAre (5.2 times counting $1.23 billion of unsettled ATM forward equity). The 10-Q's debt service and fixed charge coverage ratio was 4.7 times. The notes and bonds are, in the company's words, unsecured: “we have not pledged any assets as collateral for these or any other obligations.” Mortgages payable were $37.1 million.

Three points specific to the filings:

• $9,485.8 million of notes (37.3%) mature between now and the end of 2029 (our arithmetic), $950.0 million of it this autumn. The $650.0 million 4.125% notes are due today, October 15, 2026. The last 8-K on EDGAR is dated August 25 and there is no 10-Q after the June 30 one, so no filing yet shows how the September and October maturities were funded; the company said at June 30 that it had $3.5 billion of liquidity at its share, including $534.6 million of cash and unsettled forward equity.
• The convertibles are a way of borrowing at a lower coupon, and the strike prices matter. The 3.500% notes are due January 2029 and were issued with a concurrent $101.9 million repurchase of about 1.8 million shares. The 3.750% notes are due August 2031 and are convertible at about $72.72. Conversion is settled with cash up to the principal and cash or shares for the excess, at the company's election. Together they are $1.86 billion (our arithmetic).
• The cost of new money is part of the story. The April 2026 $800.0 million notes were priced at an effective 5.047% yield (4.44% blended with a cross-currency swap) and the July €600.0 million notes at a 3.716% yield, against a 3.9% average on the whole stack.

Where the money comes from: shares, loans and joint ventures

Share count. Shares outstanding were 946.2 million at June 30, 2026, against 914.3 million a year earlier (up 3.5%, our arithmetic) and 934.0 million at December 31, 2025. Diluted shares for AFFO rose 3.4% year on year in Q2 (937.3 million against 906.4 million) while AFFO dollars rose 7.9% ($1,022.1 million against $947.5 million), which is how a 3.8% rise in AFFO per share comes out of 7.9% in dollars. In Q2 the company raised $843.0 million of stock at a weighted average of $61.52; at June 30, 21.1 million shares were sold forward under the ATM at a weighted average of $58.34, and by August 5, 22.5 million shares (about 2.4% of shares outstanding, our arithmetic) remained unsettled, for about $1.3 billion of expected proceeds. In 2025 the company settled 42.0 million forward shares for $2.4 billion.

Loans. Interest and dividend income on loans and preferred equity was $88.5 million in Q2 2026 against $39.5 million a year earlier (up 124%, our arithmetic). The loan book was $3,297.6 million at June 30 against $1,682.1 million at December 31, with an 8.6% average rate. The biggest change is unsecured and mezzanine loans: $1,261.0 million at 9.1%, against $214.7 million, which the 10-Q says fund “data center and industrial investments.” The Bellagio preferred equity ($650.0 million at 8.1%) produced $26.1 million of income in the half. Future funding commitments on loans were $375.4 million, and the allowance for credit losses was $79.8 million. The company also announced a June 2026 data center joint venture with Cloud Capital in which it expects to invest up to $1.4 billion for 45% of a three-asset Northern Virginia portfolio valued at more than $6.0 billion; it closed the first asset after June 30. None of this appears in the lease-expiration or client tables, because ABR excludes loan income.

What it means for the dividend. The loan interest line is 8.7% of Q2 AFFO in dollars (our arithmetic; it is revenue, not profit). A part of the dividend now rests on borrowers, not tenants, and the company reserves for that: the first-half credit loss provision of $46.4 million was mostly on newly acquired loans.

How Realty Income compares with non-traded net-lease vehicles

This page's readers include people who own or are considering a non-traded net-lease REIT. One comparison is supported by primary sources on both sides: Blue Owl Real Estate Net Lease Trust (ORENT, our review), whose Q2 2026 10-Q is in our file.

The two cost lines are not a like-for-like fee comparison. Realty Income's G&A is the cost of an internal management team and carries no performance fee, but its other costs (interest, depreciation, property expenses) sit in other lines. ORENT's figure is the fees the adviser and its affiliates were allocated, and ORENT also pays its own interest and expenses. What the comparison does show is how different the ownership structure is: for each dollar Realty Income distributed in the half, the filing shows 7.7 cents of G&A; for each dollar ORENT distributed, 41.5 cents went to adviser fees and the performance allocation. The other difference is the exit. Realty Income stock can be sold any trading day at the market price, which moves; a non-traded REIT repurchases at NAV under rules that can change. Our pages on publicly traded vs non-traded REITs and net-lease lease clauses cover the mechanics.

What a holder or reader can do with this

This page is analysis of public documents, not investment, legal or tax advice. What the filings let you check yourself:

• Compare payout to growth, not just the yield. The 10-Q states a 5.2% annualized dividend yield on the $61.96 June 30, 2026 price. That price is dated; what stays checkable is the payout (74.4% of AFFO in Q2) and the growth gap (dividend up 0.7% in twelve months, AFFO per share up 3.8%).
• Read AFFO with the termination line next to it. The $40.2 million in Q1 is not a recurring rent; the company's own guidance range for 2026 termination income is $45-50 million.
• Watch four dated items. The $650.0 million notes due today; the $300.0 million due September 15 (check the Q3 10-Q for how they were repaid); the Q3 2026 10-Q, which will update the lease-expiration table; and the 22.5 million forward ATM shares, which settle as the company chooses.
• Size the position. Realty Income is one REIT paying one monthly check from 1,798 clients, with the largest, Dollar General, at 3.3% of base rent and the top 20 at 34.8%.

If a large part of your income depends on this one payer, a conversation with a qualified adviser about how it fits with the rest of your holdings may be worth having.

FAQ

All figures are from Realty Income Corporation (SEC CIK 726728) filings read on EDGAR on October 15, 2026: Form 10-K for 2025 (accession 0000726728-26-000011); Forms 10-Q for the quarters ended September 30, 2025 (0000726728-25-000148), March 31, 2026 (0000726728-26-000030) and June 30, 2026 (0000726728-26-000048, filed August 6, 2026); earnings releases attached to Forms 8-K for Q4 2024 (0000726728-25-000049), Q1 2025 (0000726728-25-000093), Q2 2025 (0000726728-25-000129), Q3 2025 (0000726728-25-000146), Q4 2025 (0000726728-26-000009), Q1 2026 (0000726728-26-000028) and Q2 2026 (0000726728-26-000044); Form 8-K of August 14, 2026 on the 3.750% convertible notes (0001104659-26-097260) and of August 25, 2026 on term loan amendments (0001104659-26-100789); and Blue Owl Real Estate Net Lease Trust's Form 10-Q for June 30, 2026 (CIK 1944366, accession 0001944366-26-000066). Percentages of AFFO, sums, growth rates, shares of rent and the 20.5% Europe total are our arithmetic from those rows; AFFO and annualized base rent are the company's definitions and non-GAAP or supplemental measures. The June 30, 2026 share price is the one printed in the 10-Q and is not current. This is analysis of public documents, not investment, legal or tax advice.