At today's price, Realty Income's stock is pricing in about 7.7% annual per-share cash-flow growth for the next ten years. Over the past five years, actual per-share AFFO growth averaged just 4.5% a year — and only 3.4% over the most recent two years.
At its current price, O implies ~7.7% annual per-share AFFO growth for the next 10 years, discounted at 9%.
Realty Income's actual 5-year per-share AFFO growth has averaged 4.5% a year — just 3.4% over the most recent two years.
Required growth vs. historical growth
Required growth from the reverse DCF below. Historical per-share AFFO CAGRs: 10-K FY2021-FY2025, DEF 14A 2026 Appendix A.
Sensitivity: what if the discount rate moves?
| WACC | Required growth |
|---|---|
| 8% | 5.36% |
| 9% (base case, large stable dividend payer) | 7.67% |
| 10% | 9.79% |
| 12% | 13.63% |
Even at the lowest discount rate tested (8%), the required growth rate (5.36%) still exceeds the two-year actual pace (3.44%).
What would move this number
- Using the "total AFFO" 5-year CAGR (~31%) instead of per-share flips the read to a "market expectations look low" conclusion — but that figure is inflated by the one-time VEREIT (2021) and Spirit Realty (2024) mega-mergers, not a repeatable annual pace.
- Lowering the terminal growth rate from 2.5% to 2.0% raises the required growth rate slightly.
Show your work
Inputs, sources, model assumptions, and the calculation
- Share price$62.95 — stockanalysis.com, Aug 19, 2026 close
- Shares outstanding946,218,033 — 10-Q Q2 FY2026 cover page, Jul 30, 2026
- Market cap$59.56B — price × shares outstanding
- Net debt$30.44B — 10-Q Q2 FY2026 balance sheet (Jun 30, 2026): total debt $30.99B minus cash $0.55B
- Target enterprise value$90.00B — market cap + net debt, cross-checked against the company's own "~$90B" reference on the Q2 FY2026 call
- Base FCF (AFFO proxy)$3.863B — FY2025 operating cash flow ($3.995B) minus real estate maintenance capex ($0.132B)
- Discount rate (WACC)9% base case (8%/10%/12% tested)
- Terminal growth rate2.5% — long-run GDP-level assumption
FCF definition note: Realty Income treats new-property acquisitions (over $6B/year) as investing activity, not maintenance capex. The maintenance-only figure used here ($3.863B) nearly matches the company's own reported AFFO ($3.895B).
Normalization check: the three-year (2023-2025) average FCF is $3.40B. 2025's value ($3.86B) is +13.6% above that average — within the ±40% threshold, so used as-is.
Historical CAGR: diluted per-share AFFO $3.59 (2021) → $4.28 (2025), 5-year CAGR 4.49%; $4.00 (2023) → $4.28 (2025), 2-year CAGR 3.44%.
The fine print
- Change the discount rate, the growth basis (per-share vs. total), or the terminal growth rate, and the answer moves — see the sensitivity table above.
- A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
- Whether 7.7% per-share growth is realistic depends on whether Realty Income's new private-fund and joint-venture funding structure actually works as intended — not on this math alone.
- Any investment decision, and its outcome, is your own responsibility.
Frequently asked questions
What growth rate does O's stock price assume?
At today's price, Realty Income's stock is pricing in about 7.7% annual per-share cash-flow growth for the next ten years.
How does that compare to Realty Income's actual growth?
Over the past five years, actual per-share AFFO growth averaged just 4.5% a year — and only 3.4% over the most recent two years — both below the ~7.7% the current price requires.
What share price was used for this analysis?
This analysis used $62.95, as of Aug 19, 2026.