Key Points

• The U.S. Core Plus Fund generates management fees.

• It also allows the REIT to invest in different types of properties.

• 10 stocks we like better than Realty Income ›

Realty Income (NYSE: O) is known among dividend investors as the real estate investment trust (REIT) that pays monthly dividends and has increased its dividend for 116 consecutive quarters. It's paid a monthly dividend for 673 consecutive quarters.

With an annual dividend of $3.258 after the most recent increase in September, the REIT's dividend yield is 5.3%, a handsome yield by any measure. If you owned 100 shares today (valued at around $6,000), you'd receive $27.15 in dividend income each month.

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The company was one of the first REITs to adopt a sale-leaseback strategy. Basically, it buys real estate and then leases it back to the seller, who then pays the rent plus ongoing expenses, including property taxes, insurance, and maintenance. Many businesses will enter into this type of agreement because it frees up precious capital for their own investment and expansion.

Realty Income has a new and growing revenue stream

Realty Income has a growing revenue stream to help support its dividend. In 2024, it entered the asset management business, though that only really began in late 2025, after an initial closing round of $716 million.

Here's how it works: The company manages a fund called the U.S. Core Plus Fund to invest in real estate and properties. It contributes 20% of the fund's capital and solicits investments from third parties for the remaining 80%. Realty Income collects a 1% management fee from those other investors. And that management fee has increased from about $800,000 in the fourth quarter of 2025 to $3.2 million in the second quarter of this year.

The Core Plus Fund currently owns 183 properties and has $2.6 billion in fee-earning equity under management, up from less than $600 million at the end of last year.

There's an additional benefit to running the fund -- it allows Realty Income to invest in properties it wouldn't have before. The company's model prevents it from investing in properties that don't provide a certain level of cash return -- typically lower-yielding, high-quality properties. Using the fund -- and other investors' money -- it can invest in properties that might not provide high cash returns upfront but have favorable long-term prospects.

It's a win-win for Realty Income and its investors. And for shareholders, it means the company should be able to continue its streak of dividend increases. I already own this stock, but I'm thinking of buying more.

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Matthew Benjamin has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.