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Better Buy After Q4 Results: Realty Income Or Spirit Realty


  • O and SRC are high-yield triple net lease REITs with investment-grade credit ratings.
  • Both recently reported Q4 results.
  • We review their Q4 results and then compare them side by side and offer our take on which is a better buy at the moment.
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Both Realty Income (NYSE:O) and Spirit Realty Capital (NYSE:SRC) are high-yield triple net lease REITs with investment grade credit ratings. Both also recently reported Q4 results.

In this article, we review their Q4 results and then compare them side by

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This article was written by

Samuel Smith profile picture

Samuel Smith is Vice President of Leonberg Capital, he has a diverse background that includes being lead analyst at several highly regarded dividend stock research firms. He is a Professional Engineer and Project Management Professional and holds a B.S. in Civil Engineering & Mathematics from the United States Military Academy at West Point and has a Masters in Engineering.

Samuel leads the investing group High Yield Investor investing group. Samuel teams up with Jussi Askola and Paul R. Drake where they focus on finding the right balance between safety, growth, yield, and value. High Yield Investor offers real-money core, retirement, and international portfolios. The services also features regular trade alert, educational content, and an active chat room of like minded investors. Learn more.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in SRC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (33)

jack kreg profile picture
Spirit is serious buy in mid 30's
its getting close, todays close at $37.60
Wondering if TH open will be strong down, todays close was weak!!
Own Both! So no problem. But O would be the last one I would part with.
Zucks profile picture
Bought SRC as a replacement for STOR which I was forced to sell for the 20% Assuming a declining market though, O at say 5%!will be very attractive. No purchases till after the Fed meeting though, too risky. Informative article, thanks.
Bucknfl profile picture
Both are holds.
birder profile picture
I own them both but about 50% more O than SRC. But SRC pays a lot higher dividend than O.
mdpath profile picture
I think it would have been interesting to have included EPRT in the discussion as it too is a triple net lease and similar to SRC.
Samuel Smith profile picture
@mdpath we have discussed it in past articles, possibly future ones as well.
Steve Rasher profile picture
@Samuel Smith Thanks for another excellent article. I have read other positive articles on $SRC, but I have always been leery because of their early issues. But your article has really piqued my interest. The section on business models was quite interesting to see that $SRC has a greater percent of its portfolio in industrial sites and that it is growing that line of their portfolio. But the one that really hit home was the section on the balance sheet and related metrics; $SRC has really solidified its balance sheet, and I like the fact that it has little debt coming due over the next few years ($O on the other hand has some coming due each of the next few years). I was pleasantly surprised to see that 98% of their debt is fixed and that 99% is unsecured. Now, I already have a sizable position in $O that I intend to continue to hold. On the other hand, in my Roth I have a REIT that has become a battle ground stock and, although I am somewhat positive on it, it is now providing a little to much drama, and $SRC looks like the kind of stock I might want to replace it with, even if I do give up a bit of yield. Thanks again for the article. Steve
Samuel Smith profile picture
@Steve Rasher you're welcome! Glad it was helpful.
Income4ever aka Cyclenut profile picture
@Steve Rasher
MPW is definitely giving us drama and I'm looking to exit for same reason ... too many other quality opportunities abound...
I'll use proceeds to add to my SPG position
Steve Rasher profile picture
@Samuel Smith Also saw @Gen Alpha article today and did my due diligence. As a result bought a nice position in $SRC today. Steve
Just added more O today. (No SRC position.)

Retired income investor
wam350 profile picture
Party City, theatres, casual dining, club corp, At Home and enough crappy fried chicken franchises in south Texas to clog the arteries of SA’s roster of authors and SRC is the equivalent of O? Oh, and declining FFO from ‘22 to ‘23. I’ll have one of whatever he’s having please.
Zucks profile picture
Having done work in Texas, those BBQs and chicken places are great places. Recommended.
@Zucks good chicken, crappy credit. In the QSR sphere, they are the bottom of the barrel.
robkrow profile picture
Good coverage. Thanks.
Jimmy_Newyork profile picture
Why did you leave out the dividend discussion? Probably up there with what most people would be looking for in a talk about net lease REIT's... Compare the dividend growth, compare the dividend coverage, compare the dividend history and safety... Great article but missed one of the key points
Samuel Smith profile picture
@Jimmy_Newyork we have discussed this in past articles. I appreciate the feedback and will keep it in mind moving forward.
Income4ever aka Cyclenut profile picture
O is high yield... honestly not in my book...
My core account money market yields about the same
Os appeal is suffering due to rather low dividend
@Income4ever aka Cyclenut all REIT prices are depressed because of higher interest rates. If Sam Smith listened to either O's or SRC's earnings call he would have discovered that while Jackson Hsieh is concerned about his cost of capital relative to his peers and has only moved into industrial and OIS in particular due to more favorable spreads (he can't compete with O, ADC or WPC for the best retail properties) Sumit Roy can tap into a war chest which will be deployed for acquisitions in one of the most favorable buy side environments in years.
Income4ever aka Cyclenut profile picture
Absolutely agree ... my only point was O is not high yield
sickkat3 profile picture
I know we'll hear this many times, but let me be first to say...I own both. And hope that someday O buys SRC.
Alaric profile picture
@sickkat3 same here. O buying SRC in an all stock deal is a no brained. I can’t think of a better acquisition target since they bought VER.
Income4ever aka Cyclenut profile picture
Looks like O is interested in further diversification away from its core and SRC is just more of the same... first it was gaming, then farming and they also have sights on industrial....
Time will tell
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