Real Estate REITs Rebound: Realty Income and NNN REIT—Which One Deserves Your Cash?

The Retail REIT Recovery Story

Whispers about doom in the retail REIT space? They’ve officially been overblown. After navigating the e-commerce scare during COVID-19 and the brutal 2022-2023 rate-hiking cycle, real estate REITs focusing on retail properties have staged a solid comeback. For the first nine months of 2025, retail-focused REITs delivered an average return of 6.9% according to Nareit—proof that the sector’s fundamentals remain intact.

Two standouts in this recovery are Realty Income (NYSE: O) and NNN REIT (NYSE: NNN), both commanding massive portfolios of retail properties across the U.S. But which one should actually be on your watchlist?

Realty Income: The Diversified Heavyweight

Realty Income owns 15,540-plus properties, making it the sector’s heavyweight champion. Here’s what caught our attention:

• Revenue mix: 80% of annual rent flows from retail properties, with grocery stores (11%), convenience stores (10%), and a solid spread across home improvement and dollar stores
• Tenant quality: Dollar General, Walgreens, Home Depot, and Walmart lead the tenant roster
• Operational health: 98.7% occupancy rate with leases renewed at 3.5% higher rates
• Cash generation: AFFO climbed 2.9% year-over-year to $1.09 per diluted share
• Dividend track record: 30+ years of consecutive quarterly increases, with October’s hike from $0.269 to $0.2695 per share
• Current yield: 5.7% on dividends, backed by management projecting 2025 AFFO of $4.25-$4.27 per share (comfortably above the $3.23 annualized payout)

The trade-off? Realty Income’s sheer size (15,000+ properties) means future growth will likely remain measured and steady rather than explosive. Adding meaningful properties requires proportionally larger capital commitments when your portfolio is this massive.

NNN REIT: The Nimble Challenger

NNN REIT operates nearly 3,700 properties leased to retailers across convenience, automotive services, restaurants, and entertainment sectors. Here’s where it stands:

• Tenant management: Successfully maintained a 97.5% occupancy rate in Q3
• Cash performance: AFFO per share increased from $0.84 to $0.86 quarterly
• Dividend trajectory: 36-year streak of increases, including an August hike of 3.4% to $0.60 per share
• Forward guidance: Management projects 2025 AFFO of $3.41-$3.45 per share, ensuring solid dividend coverage
• Current yield: 5.9%

The advantage here? Smaller portfolio size means new property acquisitions can still materially impact growth metrics—a luxury Realty Income doesn’t enjoy at its current scale. NNN REIT’s narrower focus on U.S. retail also makes it easier to monitor and optimize operations.

The Verdict: Size vs. Optionality

Both real estate REITs have cracked the code on surviving retail headwinds. They’ve cherry-picked tenants running recession-resistant businesses and locked in healthy occupancy rates. Combined with 30+ years of annual dividend hikes and similar yield profiles (5.7% vs. 5.9%), they’re competitive on the income front.

The real differentiator? Realty Income offers stability through diversification and scale, while NNN REIT presents a smaller, more targeted bet with clearer growth runway. If you’re chasing income with a growth kicker, NNN REIT’s higher yield and expansion potential might edge out Realty Income’s established reliability.

Both deserve consideration—it depends on whether you value proven size or future upside more.