One real estate investment trust (REIT) stock is gaining attention on Wall Street. That may be because it has soared nearly 20% since the end of October. Yet one Wall Street analyst thinks Realty Income (O 1.11%) shares could have another 20% left to run.
Shares of the REIT are rebounding from a decline earlier this fall that brought the stock to its lowest level in nearly four years. But Realty Income subsequently announced two investments that helped spur Wolfe Research analyst Andrew Rosivach to upgrade the stock last week to a price target of $66 per share. That represents a 20% gain from the recent price. Additionally, Exane BNP Paribas analyst Nate Crossett also just upgraded Realty Income and put a $63 price target on the stock.
NYSE: O
Key Data Points
Growing and diversifying
One catalyst of the recent decline in Realty shares was its announcement on Oct. 30 that it was acquiring fellow REIT Spirit Realty Capital in an all-stock transaction valued at about $9.3 billion. Those assets will compliment Realty's existing portfolio by adding more industrial properties and more geographic diversity.
Two weeks later, Realty announced a new joint venture with Digital Realty for data center development. Realty will hold an 80% equity interest in that venture. Realty management has been working to add more diverse properties as it grows. Earlier this year, the company announced its first investment in a large Las Vegas casino property, too.
A dividend stock to own
The company expects these growth initiatives will allow it to continue to increase its consistently rising dividend. Shareholders have long enjoyed a monthly dividend payment from Realty Income that has consistently increased for decades. Just yesterday, the company announced its 123rd dividend increase since 1994. The REIT yields about 5.5% at the recent stock price.
Wall Street is taking notice that the share price drop has presented investors with an opportunity to potentially see capital gains along with a steady, and growing, income stream. Investors who are paying attention should be taking advantage of that opportunity.
