Dividend-Yielding REIT Companies: Weighing Realty Income Against NNN REIT

Real estate investment trusts have emerged as attractive vehicles for income-focused investors, particularly as market fears about the retail sector have largely subsided. The tax structure of REIT companies mandates the distribution of at least 90% of taxable income as dividends, making them inherently attractive to yield-seeking portfolios. Over the first nine months of 2025, retail-focused REITs delivered an average return of 6.9% according to Nareit data, reflecting the sector’s recovery from recent headwinds.

Two prominent players in this space—Realty Income and NNN REIT—each offer compelling but distinct investment profiles. The decision between these two leading REIT companies hinges on your preference for scale versus growth potential.

NNN REIT: Smaller Scale, Sharper Growth Trajectory

NNN REIT manages approximately 3,700 properties leased to retailers spanning convenience stores, automotive services, restaurants, and entertainment venues. Despite its more compact portfolio relative to competitors, the company demonstrates solid operational performance. The third quarter recorded a 97.5% occupancy rate, indicating strong tenant quality and market positioning.

From a financial perspective, NNN REIT’s quarterly adjusted funds from operations (AFFO) per share expanded from $0.84 to $0.86. The company’s management projects full-year AFFO will reach $3.41 to $3.45 per share, providing comfortable coverage for dividend obligations. The stock currently yields 5.9%.

What distinguishes NNN REIT among REIT companies is its capacity for meaningful growth. A smaller asset base means each new property acquisition can meaningfully impact overall growth metrics. The company has also maintained an impressive dividend track record, recently celebrating 36 consecutive years of annual payout increases following an August hike of 3.4% to $0.60 per share.

Realty Income: Diversification and Stability

Realty Income operates over 15,500 properties, with roughly 80% of rental income derived from retail tenants. Its portfolio encompasses grocery stores (11%), convenience retailers (10%), home improvement outlets, and dollar stores. The remaining exposure spans industrial properties, gaming facilities, and other commercial real estate. Major tenants include Dollar General, Walgreens, Home Depot, and Walmart.

The company’s occupancy rate of 98.7% underscores effective tenant management and market positioning. More significantly, Realty Income renewed leases at 3.5% higher rental rates, demonstrating pricing power in a competitive environment. Year-over-year AFFO per share grew 2.9% to $1.09, with full-year projections reaching $4.25 to $4.27 per share—comfortably covering the annualized $3.23 per-share dividend.

This largest of the two REIT companies offers a monthly dividend paid to shareholders, with increases distributed multiple times annually. The most recent adjustment occurred in October, incrementing the monthly per-share payout from $0.269 to $0.2695. The current dividend yield stands at 5.7%. The company has raised dividends quarterly for over three decades since its 1994 IPO.

Comparing These Major REIT Companies

Both of these REIT companies have successfully navigated a challenging retail environment by concentrating on properties leasing to economically resilient tenants. Their comparable dividend yields and consistent payout growth histories—each exceeding 30 consecutive years—make them structurally similar investment vehicles.

However, meaningful differences shape the investment thesis. Realty Income’s substantial size grants it unparalleled diversification and stability, yet creates a challenge: adding new properties becomes incrementally more difficult to drive meaningful percentage growth. With 15,000+ properties already in its portfolio, the company likely attracts investors seeking steady, predictable returns rather than acceleration.

NNN REIT, by contrast, operates from a smaller platform where strategic property additions can still move the growth needle meaningfully. The concentration on U.S. retail properties provides focus, though at the cost of some diversification. For investors prioritizing growth above absolute stability, this smaller REIT company may present a more compelling opportunity.

The Investment Decision

Selecting between these two REIT companies ultimately reflects your investment philosophy. If you value the established track record and broad diversification of a massive property owner, Realty Income delivers that positioning. If you’re willing to accept narrower specialization in pursuit of stronger growth prospects, NNN REIT merits serious consideration.

Both REIT companies trade at reasonable valuations with attractive dividend coverage. The choice hinges on whether you prefer the tortoise approach—Realty Income’s steady, stable growth—or the opportunity for more accelerated gains with NNN REIT. Either path offers meaningful income generation and the defensive characteristics that make REIT companies attractive during periods of economic uncertainty.