Realty Income vs. NNN REIT: Comparing Two Top-Performing US Retail REITs

Why Retail REITs Are Worth a Second Look

The narrative around retail-focused real estate investment trusts has shifted dramatically. What once seemed like a declining sector has proven resilient, with US retail REITs delivering solid returns even through economic headwinds. For 2025’s first three quarters, the sector averaged 6.9% returns—a testament to improved property management and tenant selection.

REITs offer a structured approach to dividend investing. By law, they must distribute at least 90% of taxable income to shareholders, creating a compelling income stream for investors. Among property types, retail remains particularly lucrative when managed strategically—yet it still requires careful vetting.

Two leading names dominate this space: Realty Income and NNN REIT. Both have navigated past market turbulence (pandemic e-commerce fears, 2022-23 interest rate hikes) and emerged stronger. If you’re evaluating which US retail REIT deserves your capital, here’s what separates them.

The Scale vs. Growth Debate

Realty Income’s Portfolio Strength

With 15,540-plus properties generating approximately 80% of annual rent from retail tenants, Realty Income operates at massive scale. Its portfolio includes dollar stores (10% of revenue), grocery anchors (11%), plus exposure to home improvement retailers and other categories. Diversification extends to industrial (15%) and gaming properties.

The company’s operational efficiency shines through its 98.7% occupancy rate and 3.5% lease renewal rates. Anchor tenants like Walmart, Home Depot, Dollar General, and Walgreens provide stability.

Financially, Realty Income posted adjusted funds from operations (AFFO)—the key cash metric for REITs—of $1.09 per diluted share, up 2.9% year-over-year. Management projects $4.25-$4.27 AFFO for the full year, easily supporting the $3.23 annual dividend. The stock yields 5.7%.

A notable achievement: quarterly dividend increases spanning three decades since the 1994 IPO, with monthly payments raised multiple times annually (most recently to $0.2695 in October).

NNN REIT’s Focused Approach

Managing 3,700 properties, NNN REIT concentrates exclusively on US retail: convenience stores, automotive service centers, restaurants, and family entertainment venues. This narrower focus enables management to exercise tighter operational control.

Occupancy held steady at 97.5% in Q3, demonstrating tenant quality. Per-share AFFO climbed from $0.84 to $0.86 quarterly, with full-year guidance at $3.41-$3.45.

Dividend coverage remains strong. The company extended its 36-year streak of consecutive annual increases via an August hike to $0.60 per share (3.4% raise). NNN’s yield sits at 5.9%—50 basis points higher than Realty Income.

The Real Difference: Size and Development Stage

Here lies the critical distinction. Realty Income’s 15,000-property base makes material growth challenging—each acquisition must be substantial to meaningfully move growth metrics. Investors should expect steady, predictable returns rather than explosive expansion.

NNN REIT, despite holding 75% fewer properties, operates at a development stage where property acquisitions still register as significant growth catalysts. A 50-property addition meaningfully alters its trajectory in ways impossible for its larger peer.

Both companies excel at tenant selection and property management in retail—businesses proved recession-resistant (essential services, repair/maintenance spending). Both maintain formidable dividend histories and comparable yields.

The Investment Case for Each

Choose Realty Income if you prioritize portfolio maturity, geographic and sectoral diversification, and predictable dividend growth from an established 31-year track record.

Choose NNN REIT if you’re willing to accept concentrated exposure (US retail-only) in exchange for higher near-term growth potential and a marginally superior dividend yield.

The decision ultimately reflects your risk tolerance and growth expectations. NNN REIT’s smaller asset base presents a more dynamic investment posture, though with less protective diversification. Realty Income offers fortress stability at the cost of measured, gradual appreciation.