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realty income (NYSE:O | o price prediction) Reddit and
The underlying numbers tell a different story.
o but mathematics is quietly broken
O trades at a Trailing P/E of 55 and Forward P/E of 40, valuations that relate to the growth name, not the net lease REIT which carries 7.91x net debt to EBITDA and only 1.47x interest coverage. The numbers below that multiplier are getting worse. 2025 EPS missed consensus by 16.05% in 4Q, 12.67% in 3Q, 44.50% in 2Q, and 14.82% in 1Q. Interest expense rose from $1.02 billion in 2024 to $1.13 billion in 2025, and loss provisions reached $471.3 million for the year. ROIC is negative.
Management’s own guidance highlights this issue. The 2026 AFFO guide of $4.38 to $4.42 implies 2.8% growth at the midpoint despite an $8.0 billion investment volume guide for the year, which is 27% above 2025 deployments. CEO Sumit Roy acknowledged that “meaningful progress may take years to materialize.” Same-store rent growth is guided at 1.0% to 1.3%, occupancy is set to increase from 98.9% to 98.5%, and the base rent of the top 20 customers is 35.8%. Paying 40x forward earnings for sub-3% per-share growth, increasing leverage and concentrated tenant exposure is a trade-off retirement income buyers are increasingly inquiring in exchange for a faster monthly payment cadence.
Better Dividend Instrument: ABBV
AbbVie (NYSE:ABBV) is a redirect, and the case hinges on three points.
1. The dividend is actually growing. AbbVie raised its quarterly payout 5.5% to $1.73, raising the annual run rate to $6.92. The quarterly dividend has increased each year from $0.40 in 2013 to $1.73 in 2026. The starting yield is 3.19%, which is lower than O’s 5.01%, and that’s the point. An expanding stream financed by increased earnings outweighs the expanded yield financed by debt issuance.
2. The growth engine is delivering results. Q1 2026 revenue came in at $15.00 billion, up 12.4% year over year and better than consensus. Skyrizi posted +30.9% at $4.48 billion, Rinvoq at +23.3% at $2.12 billion, and Neuroscience at +26.0% at $2.88 billion. Management raised full-year 2026 adjusted EPS guidance to $14.08 to $14.28. CEO Robert Michael described AbbVie as having “an excellent start to 2026, with first-quarter results exceeding our expectations.” The Humira erosion that led to the bear case has already been absorbed, with Skyrizi and Rinvoq more than making up for the lost revenue.
3. Financial quality is in a different league. Gross margin is 70.2%, operating margin is 32.8%, interest coverage is 6.94x and free cash flow yield is 4.88%. Compared to the midpoint of 2026 EPS guidance, the dividend of $6.92 indicates a payout ratio close to 48.8%, providing real support for further growth and pipeline reinvestment. The Forward P/E of 14 is meaningfully cheaper than the Forward P/E of 40, with the Street rating a 24 Buy or Strong Buy and a consensus price target of $250.33 versus the current price of $206.60.
what to watch
For income-focused investors considering the two names, the case boils down to AbbVie’s growing payout, expanding earnings base, and low forward multiple against O’s expanded valuation, sub-3% AFFO growth and rising leverage.