Best Stock to Buy Right Now: Realty Income vs. Agree Realty
That's the backdrop for investors considering between net lease REIT Agree Realty (NYSE: ADC) and its average 4.1% yield, and Realty Income (NYSE: O) and its above-average 5.8% yield. But there's more than yield to examine in this matchup.
What do Agree Realty and Realty Income do?
At the core of the business models followed by Agree Realty and Realty Income are net lease properties. Generally speaking, these assets are occupied by a single tenant, who is responsible for most property-level operating costs. This gives the tenant effective control over the asset they occupy, and reduces the risk for the landlord, since the property owner doesn't have to deal with the costs and effort of maintaining the asset.
Although any single property is high risk, because there's just one tenant, over a large-enough portfolio, that risk is well mitigated.
Realty Income is the largest net lease REIT with more than 15,600 properties. Agree Realty is a smaller REIT, but still has a significant portfolio with roughly 2,400 properties. But size isn't the only difference between these two portfolios.
Agree is focused on owning retail assets in the United States. Realty Income's portfolio is roughly 75% retail, with industrial and "other" assets rounding the portfolio out to 100%. In the "other" category are things like vineyards, casinos, and data centers. It has a far more diversified portfolio, noting that it also has investments in several European countries.
Given how much larger Realty Income is than Agree, it simply takes more transaction volume to move the needle on the top and bottom lines. The REIT's diversification helps ensure that it has more levers to pull when it comes to making new investments.
From a business fundamentals perspective, Agree is small and focused on growing its core, while Realty Income is larger and more diversified. That has translated into very different valuations, which is, perhaps, appropriate.
Dividend yield or dividend growth?
As noted, Agree Realty's dividend yield is 4.1% or so, right in line with the REIT industry average. Given the higher 5.8% yield on offer from Realty Income, it is pretty clear that investors are affording Agree Realty a premium price.
It is worth highlighting that Realty Income, given its large size, is considered a bellwether in the net lease space. If you are looking to maximize the income your portfolio generates, then Realty Income will be the obvious choice here.
However, that comes at a cost. That cost is growth. Agree Realty is projecting adjusted funds from operations (FFO) growth of 3.6% at the midpoint of its 2025 guidance. At the high point of Realty Income's guidance, it will only grow adjusted FFO by 2.1% or so. If you prefer to own a REIT that's growing more quickly, the better choice is Agree Realty.
There's a secondary impact on the growth front. Realty Income's dividend has increased around 4.3% a year, on average, over the past 30 years. That's not bad, but if adjusted FFO is only expected to grow by 2% or so, investors should expect notably lower dividend increases over the near term.
Agree Realty, on the other hand, has a bit more room to increase its dividend. And on that front, it has increased its dividend by around 5.5% a year, on average, over the past decade. Again, the near-term increases might fall below that figure, but they are still likely to be above the dividend growth on offer from Realty Income. So if you lean toward faster-growing dividends, Agree will win.
What are you trying to achieve?
At the end of the day, both Realty Income and Agree Realty are well run, financially strong net lease REITs. Dividend investors probably wouldn't be making a mistake with either one. However, they aren't interchangeable.
If you are looking for yield and/or diversification, then Realty Income is the likely winner here. If you prefer faster-growing businesses and dividends, you'll probably prefer Agree Realty.
Should you invest $1,000 in Realty Income right now?
Before you buy stock in Realty Income, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Realty Income wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!*
Now, it's worth noting Stock Advisor 's total average return is978% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of May 19, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
37 minutes ago
- Globe and Mail
58% of Warren Buffett's $292 Billion Portfolio Is Being Wagered on 4 Unstoppable Stocks
Key Points Warren Buffett's track record -- a nearly 5,800,000% cumulative return in Berkshire Hathaway's Class A shares (BRK.A) since the mid-1960s -- has led to investors riding his coattails. One of the prime characteristics of Buffett's investment philosophy is portfolio concentration. Buffett has almost $169 billion invested in four brand-name companies with easily identifiable competitive advantages and hearty capital-return programs. 10 stocks we like better than Apple › There isn't a money manager on Wall Street who commands more attention than Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett -- and there's a good reason why. Since ascending to the CEO chair 60 years ago, the aptly dubbed "Oracle of Omaha" has overseen a cumulative return in his company's Class A shares (BRK.A) that's approaching 5,800,000%, as of the closing bell on July 14. This is nearly 140 times greater than the return of the benchmark S&P 500 over six decades, including dividends. Given Buffett's unwavering desire to secure a good deal and his love of businesses with sustainable competitive advantages, some investors choose to ride his coattails to long-term success. Although Buffett, who's set to retire from the CEO role at years' end, and his top advisors are overseeing more than three dozen stocks in Berkshire's $292 billion investment portfolio, this portfolio is quite top-heavy. This is to say that Buffett has concentrated a significant portion of his company's invested assets -- 58%, or almost $169 billion -- in just four unstoppable stocks. Apple: $62.6 billion (21.5% of invested assets) Although Apple (NASDAQ: AAPL) has been Warren Buffett's top investment holding at Berkshire Hathaway for years, the gap between it and Berkshire's second-largest holding by market value has shrunk considerably. This likely has to do with Berkshire's billionaire chief selling 67% of his company's stake in Apple (more than 615 million shares) since Sept. 30, 2023. Don't get me wrong -- Warren Buffett still appreciates Apple for a variety of reasons I'll touch on momentarily. But with the peak marginal corporate income tax rate affixed at its lowest level since 1939, Buffett viewed locking in some of his company's substantial gains as a smart strategic move. While Buffett can't explain how Apple iPhones work, he does have a good bead on consumer behavior. Apple has a rich history of building trust with the purchasers of its products, and consumers have tended to be particularly loyal to the Apple brand. Since a 5G-capable version of the iPhone was introduced during the fourth quarter of 2020, it's had little trouble maintaining a majority of U.S. smartphone market share. Berkshire's chief has also heaped praise on Apple CEO Tim Cook for his leadership. Though net sales of physical devices have been relatively stagnant in recent years, Cook is overseeing steady growth in Apple's subscription services. This segment should enhance customer loyalty and bolster the company's margins over time. However, Apple's not-so-secret weapon is its world-leading capital-return program. Since initiating a buyback program in 2013, it's spent $775 billion to repurchase more than 43% of its outstanding shares. Buying back stock has had a decisively positive impact on its earnings per share and made its stock more attractive to value-seeking investors. American Express: $48.7 billion (16.7% of invested assets) Billionaire Warren Buffett's No. 2 holding is credit-services provider American Express (NYSE: AXP). Though Berkshire Hathaway hasn't purchased shares of "AmEx" (as American Express is commonly known) in quite some time, a 130% increase in AmEx's stock over the trailing-three-year period is giving Apple a run for its money. The reason American Express has made for such a rock-solid long-term investment -- it's been a continuous holding for Buffett's company since 1991 -- is its ability to benefit from both side of the transaction aisle. On one hand, it's America's third-largest payment processor by credit card network purchase volume. Facilitating transactions generates AmEx fee revenue from merchants. The key for American Express is that it also acts as a lender to businesses and consumers via its credit cards. This allows AmEx to reap the benefits of annual fees and/or interest income. Though being a lender does expose the company to potential credit delinquencies and loan losses during recessions, the U.S. economy spends a disproportionate amount of time expanding. Further, AmEx has a knack for attracting high-earning clientele. High-earning cardholders are less likely than low- and middle-income individuals to alter their spending habits or fail to pay their bills during economic hiccups. There's a reason American Express is one of eight stocks Warren Buffett considers "indefinite" holdings. Bank of America: $29.7 billion (10.2% of invested assets) In similar fashion to Apple, Berkshire Hathaway's billionaire investor has been notably paring down his company's stake in Bank of America (NYSE: BAC). Since July 17, 2024 -- we know this specific date thanks to required Form 4 filings with the Securities and Exchange Commission -- Buffett has green-lit the sale of more than 401 million shares of BofA stock. Nevertheless, it's still Berkshire's third-largest holding by market value. Buffett's selling activity in Bank of America likely boils down to a mix of profit-taking with an advantageous peak marginal corporate income tax rate, and the expectation that interest rates will further decline with the Federal Reserve in a rate-easing cycle. Among money-center banks, BofA is the most sensitive to changes in interest rates. When the nation's central bank boosted the federal funds rate by 525 basis points from March 2022 to July 2023, no large bank benefited more, in terms of interest income, than Bank of America. But when interest rates decline, it might feel more pain than its peers. Berkshire Hathaway's investment lead also tends to pack his company's $292 billion portfolio with companies that can take advantage of the nonlinearity of economic cycles. As alluded earlier, the U.S. economy spends much more time in the sun than under the proverbial clouds. Whereas the average U.S. recession has resolved in 10 months since the end of World War II, the typical economic expansion sticks around for roughly five years. Lengthy periods of expansion have allowed BofA to prudently expand its loan portfolio over time. Coca-Cola: $27.8 billion (9.5% of invested assets) Lastly, the Oracle of Omaha has close to $28 billion invested in consumer staples giant Coca-Cola (NYSE: KO). Like AmEx, Coca-Cola is a longtime holding of Berkshire Hathaway (since 1988) that Buffett considers something of a "forever" stock. The foundational talking point of Coca-Cola's operating model is that it sells a basic need good: beverages. No matter how well or poorly the stock market or U.S. economy are performing, consumers need food and beverages. This means Coca-Cola's operating cash flow tends to be highly predictable in virtually any economic climate. Another sustainable edge for this company has been its geographic diversity. With the exception of North Korea, Cuba, and Russia (the latter has to do with its invasion of Ukraine in 2022), Coca-Cola has ongoing operations in every other country. This provides consistent cash flow in developed markets, and organic sales growth potential in faster-growing emerging markets. The Coca-Cola investment story is a reflection of its ability to connect with consumers. It's been able to rely on more than a century of history to engage with mature audiences, and has leaned into artificial intelligence (AI) as a means of tailoring its advertising for younger audiences. Few companies have more consistently crossed generational gaps with such ease. The icing on the cake for Warren Buffett is the delectable yield Berkshire is netting annually from its Coca-Cola position. With a minuscule cost basis in Coca-Cola of $3.2475 per share, Berkshire Hathaway is securing a nearly 63% annual yield on cost. There's no reason for Buffett or his team to ever sell this stake in Coca-Cola. Should you invest $1,000 in Apple right now? Before you buy stock in Apple, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,281!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,415!* Now, it's worth noting Stock Advisor's total average return is 1,058% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
Globe and Mail
37 minutes ago
- Globe and Mail
Canada's only graphite miner faces uncertain future as it holds out hope of government financing
The head of Northern Graphite Corp. NGC-X is optimistic that Ottawa will provide a key part of a make-or-break financing package needed to keep North America's only graphite mine in operation. Security of supply for domestic critical minerals mines has rarely been a more urgent issue as Canada struggles with an entrenched trade war with the United States. Prime Minister Mark Carney has made developing domestic resource projects one of the biggest priorities for his government. Ottawa-based Northern Graphite operates the Lac des Îles graphite mine in Quebec. In operation since 1989, the existing pit is due to run out of ore before the end of the year. To extend the life of the mine into the 2030s, an investment of $10-million is urgently needed. Graphite, alongside lithium, cobalt and copper, is one of several critical minerals used in low-carbon energy and is a key input in the defence sector. Mr. Carney has repeatedly stressed that Canada must expand production of critical minerals in order to meet new NATO spending requirements, and a shutdown of the Quebec mine could weaken the country's ability to meet those commitments. New NATO target will require Canada to spend $150-billion annually on defence, Carney says Despite extensive talks with the public and private sector, Northern Graphite has been unable to raise new funding. With debt of US$40-million, and a cash position of only about $300,000, the company could also eventually be facing a liquidity crisis. Hugues Jacquemin, chief executive officer of Northern Graphite, said in an interview this week that while the current situation is alarming, he's hopeful the federal government will come through with a major piece of the financing, a step that would keep the mine in operation. 'They recognize how dire the situation is, and there's quite a strong sense of urgency from them to come and find a way to help us,' he said. 'So I'm quite confident that we'll get there.' Industry Minister Mélanie Joly, whose riding is in Quebec, is aware of the strategic importance of the asset. Last Friday, when asked in a press conference about the mine, she warned about the dangers of overreliance on one country in critical minerals. China dominates the production and refining of graphite worldwide and it has abused its position to stomp out foreign competition. Bloomberg News on Thursday reported that the U.S. Commerce Department was set to impose preliminary anti-dumping duties of 93.5 per cent on Chinese imports of graphite after concluding the Chinese were unfairly subsidizing the industry. Despite the need for Canada to diversify further away from China in graphite, it's unclear whether Ottawa will ultimately invest in the mine. When asked in an e-mail from The Globe and Mail whether the government will step in, a spokesperson for Ms. Joly did not provide a comment by Thursday afternoon. Even though its market capitalization is only about $18-million, and its shares trade for 14 cents apiece on the TSX Venture Exchange, Northern Graphite commands a high profile internationally. Last week, the company hosted an EU delegation that included Stéphane Séjourné, executive vice-president of the European Commission for Prosperity and Industrial Strategy. Remarking on his visit, Mr. Séjourné, in the same press conference that Ms. Joly participated in on Friday, stressed the importance of more co-operation between Canada and the EU in critical minerals. Northern Graphite primarily sells its graphite to U.S. industrial customers, who use the metal in a range of applications including brake pads, industrial lubricants, fuel cells and in defence applications such as the manufacturing of ammunition, cannons, missiles and in paint for fighter jets. Owing to the mine's proximity to its customer base and the quality of its product, the company is able to charge its customers up to three times as much as comparable Chinese producers. Despite all of these advantages, investors have been reluctant to put new money into the company. Part of the issue is that the U.S. industrial segment isn't a big market. But the bigger problem is that investors are unsure about whether the company can compete against China in the electric-battery market, a much bigger segment that Northern Graphite hopes to compete in. Opinion: Facing such fancy Chinese EVs, do Western carmakers even have a future? 'The Chinese have been so aggressive on their pricing that it seeds a lot of doubt in investors' minds whether graphite is a commodity they want to invest in,' Mr. Jacquemin said. 'What they're scared of is the geopolitical world changes, and then suddenly the Chinese flood the market with graphite at very low prices, and the mine is not able to make money.' Apart from operating the Quebec mine, Northern Graphite also owns a graphite mine in Namibia that is idle and which it hopes to eventually restart. It also has plans to build a processing plant in Europe that would see the company's EV capabilities expand exponentially. Toronto-based Sprott Resource Streaming and Royalty Corp. is the company's major debt creditor. Earlier in the year, Northern Graphite breached covenants on some of its debt and said it was working with Sprott to amend its debt package.
CBC
38 minutes ago
- CBC
Canned cocktail hitting you hard? As ready-to-drink cans grow in popularity, some are getting stronger
If you've ever put back a can of Cutwater, and only then realized how much booze is in it, TikTok would like to remind you that you're not alone. Consumers have been sharing their stories — and surprise — about how strong the canned cocktails are on social media. "One can, I'm drunk," one Canadian user posted on TikTok. "Suddenly we have this one option at the liquor stores that just gets you wasted." Another user said the effects of one can felt like taking multiple shots. While they come in a standard, 355-millilitre can, some flavours of the drinks pack a far bigger punch than a standard beer, with an alcohol percentage of 12.5 per cent listed on the packaging. But Cutwater is far from the only brand making high alcohol-by-volume (or ABV) products — Dillon's and Founder's are among the brands also selling canned cocktails at 12.5 per cent, while Mike's Hard, White Claw, Twisted Tea and more all make higher alcohol versions of their original products. Ready-to-drink beverages (or RTDs) — pre-made cocktails, hard seltzers or anything else that comes ready to consume that isn't wine or beer — have seen a boom in recent years. The Liquor Control Board of Ontario (LCBO) says that ready-to-drink beverages are one of the fastest growing categories in recent years, with sales increasing by 9.5 per cent to $745.1 million total in 2024 alone. And Canada-wide, the ciders, coolers and ready-to-drink category together amassed about $2.29 billion in sales in 2023-24, according to Statistics Canada — more than double what it was in 2018-2019. Alongside that popularity, the market for higher alcohol percentage has also grown, according to industry experts. But with all the new varieties of RTDs available, consumers might not be accustomed to — or even aware — of the amount of booze they're getting. Demand for higher ABV Andrew Ferguson, owner of Kensington Wine Market in Calgary, says the demand for stronger drinks has led to the rise of boozier pre-made cocktails. "People want things that are maybe twice as strong as your average RTD, and so that's why they're bottling them at 10 per cent or 11 per cent," Ferguson said. "Now, whether [all] people are noticing that or not is a whole other matter." Ferguson says he expects folks are used to most cans having five per cent alcohol. "The average consumer is probably just assuming [all cans are] gonna be about the same, and so there won't be that much difference," Ferguson said. And even if they do see the number on the front, they might not fully know what that per cent means for them, says Marten Lodewijks, president for the North American wing of alcohol industry research group IWSR. "Everyone knows seven is bigger than five, and 10 is bigger than seven. So mathematically that lands," Lodewijks said. "But how strong is seven per cent? How strong is 10 per cent? How strong is five per cent? That's not something that is typically well understood by consumers." Marketing of cans is shifting — so read them carefully When it comes to higher alcohol percentage drinks, Lodewijks says there's a bang-for-your-buck factor — cans at a standard five per cent are often priced the same as those that are seven, 10 or even 13 per cent. "So if I am feeling a bit financially constrained, then you're going to opt for that better value-for-money proposition. And we're definitely seeing a lot of skew in that direction," Lodewijks said. While high alcohol drinks have always existed, the marketing of them has shifted as the product category has grown, according to Lodewijks. "Traditionally the high ABV products, they kind of often would make you look like an alcoholic. There'd be very large cans that had fairly aggressive names, and it was quite clear what the purpose of them was," Lodewijks said. But within the past few years, he says that's changed — while there's some outliers, high ABV products might look like any other can on the shelf, Lodewijks says. WATCH | Navigating Canada's new alcohol guidance: Navigating Canada's new alcohol guidance | The Breakdown 2 years ago New Canadian health guidance drastically reduces the amount of alcohol consumption that's considered safe. Oncologist Dr. Fawaad Iqbal and substance abuse researcher Tim Naimi help explain the research and why they believe it can save lives. Markus Giesler, a marketing professor at York University's Schulich School of Business, agrees. The marketing and packaging of many high ABV drinks use words like "water," he says, or imagery we'd associate with soft drinks — "drinks that we might associate with quenching our thirst but not necessarily getting drunk." Beyond that, many brands now have a higher percentage version of their original drink — like White Claw, which makes a seven per cent version of their hard seltzers, while the original drink was only five per cent. Giesler says that difference might be hard to miss, especially if shoppers are in a rush, or picking up a few cans quickly on their way to a party. Because brands are changing their marketing so much in an effort to make their ready-to-drink product stand out, marketing professor Marvin Ryder says consumers can't rely on the idea that a single can is a way to measure how much you're drinking. The best antidote to an embarrassing night, he says, is to read the ABV labels on cans before you crack them. "Don't get sucked in by pretty colours or pretty brand names," Ryder said. "Read, be an educated consumer — understand what you're getting in each of these different products, and then have fun."
