Dividend Standoff: Realty Income vs. NNN REIT – Which US Retail REIT Deserves Your Investment?

The Comeback Story Nobody Saw Coming

Skeptics have long written off retail REITs, convinced that e-commerce and rising interest rates would be their downfall. But here’s what actually happened: through 2025’s first nine months, retail-focused REITs delivered an average return of 6.9%, according to the National Association of Real Estate Investment Trusts (Nareit). The narrative has shifted. What looked like a death sentence for brick-and-mortar landlords turned into a genuine recovery story. Today’s most pressing question isn’t whether to invest in retail REITs—it’s which one to pick.

Realty Income (NYSE: O) and NNN REIT (NYSE: NNN) both stand as titans in this space, commanding thousands of retail properties across the US. Yet they operate from distinctly different playbooks. To understand which merits your capital, we need to dig into the numbers that actually matter.

Realty Income: Scale and Steadiness

Let’s start with the elephant in the room: Realty Income owns 15,540-plus properties, making it a retail real estate colossus. Roughly 80% of rental income flows from retail tenants—dollar stores and convenience outlets alone account for 21% of the portfolio. Blue-chip names dominate the tenant roster: Dollar General, Walgreens, Home Depot, and Walmart all feature prominently.

The real test of tenant quality shows up in occupancy rates. Realty Income maintained a 98.7% occupancy rate while renewing leases at 3.5% higher rental rates. This isn’t just survival; it’s expansion within existing properties.

The dividend picture tells an equally compelling story. Adjusted funds from operations (AFFO)—the metric that determines how much cash REITs can actually distribute—grew 2.9% year-over-year to $1.09 per diluted share. With management guiding for $4.25 to $4.27 in annual AFFO per share, the current annualized dividend of $3.23 sits comfortably covered. The monthly payout, most recently raised in October to $0.2695 per share, reflects over three decades of consecutive annual increases since the 1994 IPO.

At 5.7% yield, Realty Income offers the dividend income that attracts institutional and retail income-seekers alike.

Yet there’s a trade-off embedded in this scale. When you already own 15,000-plus properties, finding deals that meaningfully move the growth needle becomes exponentially harder. Compounding returns plateau. Realty Income investors essentially sign up for slow, predictable appreciation with monthly income checks—which suits some portfolios perfectly and leaves others wanting more.

NNN REIT: Smaller, Hungrier, More Focused

NNN REIT operates a leaner portfolio of 3,700 properties, but this constraint becomes an advantage. Its tenant base spans convenience stores, automotive service centers, restaurants, and family entertainment venues—a diversified retail mix without the sheer sprawl.

The operational metrics impress. A 97.5% occupancy rate in Q3 ranks alongside Realty Income’s performance. More importantly, quarterly AFFO per share climbed from $0.84 to $0.86, signaling positive momentum even in a challenging environment.

The dividend narrative mirrors Realty Income’s durability: 36 years of consecutive annual increases. The most recent boost—a 3.4% hike to $0.60 per share in August—reflects management’s confidence. Projected AFFO of $3.41 to $3.45 per share leaves ample coverage for the elevated payout, translating to a 5.9% dividend yield.

Here’s where NNN REIT finds its competitive edge: relative smallness is actually its superpower. When management deploys capital into new properties, those acquisitions have outsized impact on growth metrics. A $50 million investment looks different when appended to a $3.7 billion portfolio versus a $40 billion portfolio. NNN REIT hasn’t exhausted its runway for high-return property investments the way larger competitors have.

The Direct Comparison That Matters

Both companies have demonstrated remarkable resilience through retail’s most turbulent years. COVID-19 disruptions, inflation-driven rate hikes, and shifting consumer behavior never translated into widespread defaults or mass tenant departures. Why? Because they deliberately lease to businesses with durable demand—grocery anchors, pharmacies, quick-service restaurants—not fashion boutiques or specialist retailers vulnerable to discretionary spending cycles.

Their dividend track records run nearly parallel: over 30 years of annual increases, similar yields hovering around 5.7-5.9%, and both have just raised payouts. The occupancy rates sit within striking distance (97.5% vs. 98.7%), suggesting equivalent operational excellence.

The genuine differentiator boils down to one variable: growth potential versus stability.

Realty Income prioritizes fortress-like consistency. Its massive scale, diversified property base (15% industrial exposure), and blue-chip tenants provide downside protection. But growth rates will remain modest. Expect steady 2-3% annual AFFO increases, not acceleration.

NNN REIT remains in an earlier phase of its institutional evolution. With fewer properties relative to available market opportunities in US retail, management can target higher-return acquisitions. Growth could accelerate. The trade-off: concentrated exposure to retail properties across a narrower geographic footprint carries higher idiosyncratic risk.

The Verdict

For investors seeking maximum income stability and the psychological comfort of owning the largest player in the sandbox, Realty Income delivers. It’s the play for those who value the monthly dividend check above all else and sleep soundly holding a 98.7% occupied portfolio of 15,500 properties.

For investors willing to accept modestly higher concentration risk in exchange for superior growth prospects, NNN REIT presents a more compelling opportunity. Its smaller scale doesn’t mean weakness—it means runway. Management has room to compound shareholder value through strategic acquisitions in a market where they remain selective rather than saturated.

The choice ultimately reflects your investment philosophy. Both are high-quality REITs with proven pandemic and rate-hike resilience. Neither will disappoint dividend seekers. The question is whether you want the safety of the industry’s largest platform or the growth potential of a still-hungry challenger—both trading attractive US dividend yields.