Latest / Dividend Investing with Fexingo: Income Stocks, Yield, and Long-Term Cash Flow Portfolios / Why Realty Income Is Outperforming in June 2026
Transcript
- Lucas: So Realty Income is up 3 percent in the last five days. That puts it at 62 bucks and change, which is a nice move for a stock that usually just plods along. Luna: Yeah, O has been the quiet outperformer this week. Meanwhile, the Nasdaq is down more than 4 percent over the same stretch. Lucas: Right. And the obvious question is — why now? I think the answer is in the bond market. The 10-year Treasury yield dropped from 4.50 percent to 4.41 percent as of yesterday. That's almost 10 basis points in a few days, and it's a big deal for income stocks. Luna: Because when bond yields fall, dividend stocks look more attractive by comparison. The math gets friendlier. Lucas: Exactly. Realty Income yields about 5.5 percent right now. When the 10-year was at 4.50, the spread was only 100 basis points. Now it's closer to 110. That extra cushion matters to yield hunters. Luna: And we're seeing that rotation play out in the data. The S&P 500 is down almost 2 percent in five days, but the Dow is up a little. The value and income side of the market is holding up. Lucas: That's the big picture. But let's zoom in on Realty Income specifically. Their business model — triple-net leases — means the tenant pays for property taxes, insurance, and maintenance. So O's cash flow is very predictable. Luna: And they pay monthly dividends, which a lot of income investors love. It's like getting a rent check in your brokerage account. Lucas: A quick honest thing — a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these shows possible. No ads, no sponsors, just people who find the conversations useful. Luna: Yeah, it's a small group, but it keeps the lights on. And it means we don't have to sell you anything. Lucas: So back to O — the other catalyst this week might be the Fed stress test results. Banks passed, and that indirectly helped REITs because it signals stability in the financial system. Realty Income's biggest tenants are investment-grade, so that matters. Luna: Johnson & Johnson was a direct beneficiary of the stress test. JNJ is up over 7 percent in five days. That's a monster move for a stock that usually moves 1 percent on a big day. Lucas: JNJ is a Dividend Aristocrat — 62 consecutive years of increases. And the stress test showed that their consumer health business generates steady cash flow even in a recession scenario. So the market repriced the stock higher. Luna: But not every dividend stock got the memo. Procter & Gamble is down 1.3 percent this week. What's going on there? Lucas: PG is interesting because they've been dealing with input cost pressures. And their last earnings report showed volume declines in some categories. So even though they're a reliable dividend payer, investors are questioning growth. Luna: That's the thing about dividend investing in June 2026 — it's not just about yield anymore. You need to look at the business fundamentals. Lucas: Right. Realty Income works because their portfolio is diversified across retail, industrial, and even some data centers. They're not just a mall REIT from 2005. And their occupancy rate is over 98 percent. Luna: So the story this week is really about the yield tailwind from falling rates, plus company-specific strength. O and JNJ are benefiting, while PG is a reminder that yield alone isn't enough. Lucas: And if the 10-year keeps sliding, we could see more money rotate into dividend stocks. The VYM ETF is up half a percent this week, SCHD is up over 1 percent, and DVY — the iShares Select Dividend ETF — is up 2.4 percent. Luna: Those are all solid gains in a week when the Nasdaq is getting crushed. It really underscores the defensive nature of dividends. Lucas: But I want to be careful not to overstate it. The yield curve is still inverted — the 2-year is at 4.11, the 10-year at 4.41. That spread is only 30 basis points. Historically, that's a recession signal. Luna: Though it has been inverted for over a year now, and the economy hasn't fallen off a cliff. So maybe this time is different, or maybe the lag is just longer. Lucas: That's the debate. But for dividend investors, the playbook is straightforward: own companies with strong balance sheets, growing cash flows, and a history of raising dividends. Realty Income checks those boxes. Luna: And JNJ too. Even after this week's run, it yields about 3 percent. That's not huge, but the dividend growth is consistent. Lucas: One more thing on O — they've been raising their dividend for over 25 years. They just announced a 0.2 percent increase last month. It's small, but it's the pattern that matters. Luna: So the takeaway for someone listening might be: check your portfolio for stocks that benefit from lower rates. REITs, utilities, and consumer staples with strong dividend records. Lucas: And don't just buy the highest yield. Look at the payout ratio, the business model, the tenant quality. Realty Income's payout ratio is about 75 percent of adjusted funds from operations. That's sustainable. Luna: Alright, so we'll keep an eye on the 10-year. If it breaks below 4.30, dividend stocks could really take off. Lucas: Or if it spikes back to 4.50, we'll see pressure again. But for this week, the income trade is working. Luna: Thanks for listening, and as always, if you find these conversations useful, consider supporting the show at buy me a coffee dot com slash fexingo. It helps us keep the podcast ad-free. Lucas: We'll be back tomorrow with another episode. Until then, keep an eye on those yields.