Why I Think the Best Dividend Stock Isn't a Tech Name: It's Realty Income

There are technology stocks that pay dividends, and I own some. But it is a competitive industry with fast-changing trends. If you are looking for a great dividend stock to buy and hold, you'll be better off building your foundation around a boring, reliable, high-yield business like Realty Income (NYSE: O). Only, this real estate investment trust (REIT) is likely to be more innovative than you think. Here's why you may want to buy this 5.1% yielding landlord right now.

Realty Income is a foundational dividend investment

Technology stocks can be volatile. I know, I own International Business Machines (NYSE: IBM) and Texas Instruments (NASDAQ: TXN). They are both reliable dividend stocks, but Wall Street's mood can shift wildly at times. Earlier this year, IBM fell 25% in a single day! I'm not selling this 100-year-old business anytime soon, but I'm glad I own boring and reliable Realty Income beside these tech names to provide some consistency to my portfolio.

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Don't underestimate the value of a high-yield dividend tortoise when you build an income portfolio . With 31 annual dividend increases behind it and a rock-solid business, I know I can count on that 5.1% yield to keep being paid. Note, too, that the 5.1% yield gets me halfway to the 10% return most investors expect from the market over time. All the REIT needs to do is grow in the low- to mid-single digits, and I'm a happy camper.

Realty Income is changing with the times

What's interesting is that Realty Income is far more innovative than you may think, given its industry. Leasing out properties seems pretty mundane, and it is. But the company has evolved a lot over time. For example, it started out investing mainly in the U.S. market. Seeing an opportunity in Europe, however, it now generates around 20% of revenues from across the pond.

The majority of the REIT's revenues are generated from single-tenant retail properties (roughly 80%). But it also has exposure to other sectors, including industrial properties, casinos, and, wait for it, data centers. Realty Income uses the net lease approach, which means tenants are responsible for most property-level expenses. Its leases also tend to be long-term. The company has a fairly risk-averse business model. But the move into casinos and data centers highlights management's willingness to lean into new opportunities. And they add diversification to the portfolio, which contains over 15,500 properties.