The 10-Year Treasury Just Hit a 24-Year High. Here's What History Says That Means for Realty Income.

The 10-year Treasury yield has pushed above 5.3%, its highest level since 2002, and Realty Income (O) sits squarely in the crosshairs. Shares are down 20% from their highs as rate pressure weighs on the REIT.

The article points to inflation concerns and deficit spending as the drivers behind the yield surge. That matters for O because the 2022 pattern appears to be repeating: REIT prices fall as rates rise when inflation, not economic growth, is pushing yields higher. REITs historically gained during rising-rate periods, but that relationship breaks down when the rate move reflects inflation headwinds.

The valuation case is the counterweight. O now offers a 6% dividend yield and trades at just over 12 times free cash flow. Interpretation: the 20% drawdown has compressed the multiple and lifted the yield, which sets up a potential entry point for income-focused buyers willing to tolerate rate volatility.

The risk is straightforward. If yields keep climbing on inflation fears, the 2022 playbook says REIT pressure can persist regardless of valuation. Cheap can get cheaper while the 10-year grinds higher.