Which REIT Offers Superior Returns: Realty Income vs NNN REIT as Your Best REIT Stock Choice

Retail REITs: From Crisis to Recovery

The fears surrounding retail-focused real estate investment trusts have proven largely exaggerated. While these properties faced headwinds during the COVID-19 pandemic and the 2022-2023 interest rate hikes, the sector has bounced back remarkably. Through the first nine months of 2025, retail-property REITs delivered an average return of 6.9%, according to Nareit data. For income-focused investors seeking consistent dividend income, REITs remain compelling options due to their tax structure—which mandates distributing at least 90% of taxable income to shareholders.

Understanding the Two Frontrunners

Two established players dominate the retail REIT landscape: Realty Income (NYSE: O) and NNN REIT (NYSE: NNN). Both command thousands of retail properties and maintain impressive dividend track records. Yet their approaches to the retail sector differ meaningfully, making the choice between them non-trivial for long-term investors.

Realty Income: Scale and Diversification

Realty Income operates a sprawling portfolio of over 15,540 properties, with roughly 80% of rental income derived from retail assets. The company strategically diversifies across grocery stores (11% of portfolio), convenience stores (10%), home improvement retailers, and dollar store chains. The remaining income flows from industrial facilities, gaming properties, and other sectors.

Major tenants like Dollar General, Walgreens, Home Depot, and Walmart anchor the portfolio. The company achieved a 98.7% occupancy rate with lease renewals secured at 3.5% higher rental rates—demonstrating pricing power.

From a financial perspective, adjusted funds from operations (AFFO)—the metric REITs use to measure cash available for distribution—reached $1.09 per diluted share, up 2.9% year-over-year. Management projects full-year AFFO of $4.25 to $4.27 per share, comfortably covering the annualized dividend of $3.23 per share. The current dividend yield sits at 5.7%.

Notably, Realty Income has increased dividends quarterly for over three decades since its 1994 IPO, with monthly distributions adjusted several times annually. October’s hike from $0.269 to $0.2695 per share reflects this consistent pattern.

The trade-off? Its massive scale means significant property acquisitions are required to move the growth needle meaningfully.

NNN REIT: Concentrated Focus and Growth Potential

NNN REIT operates approximately 3,700 properties leased to retailers spanning convenience stores, automotive services, restaurants, and family entertainment centers. The tighter portfolio size proves advantageous—property investments can still meaningfully impact growth metrics.

The company maintains operational efficiency, reporting a 97.5% occupancy rate in Q3. Quarterly AFFO per share rose from $0.84 to $0.86, with management guiding toward $3.41 to $3.45 for the full year. At this projection level, the dividend remains well-covered.

NNN REIT boasts its own impressive dividend pedigree: 36 consecutive years of increases, with August’s 3.4% hike bringing the distribution to $0.60 per share. The current yield reaches 5.9%—matching or exceeding Realty Income.

Financial Metrics Comparison

Both entities demonstrate resilience in navigating retail challenges through careful tenant selection focused on recession-resistant businesses. Each maintains similar dividend yields (5.7% vs 5.9%) and has established three-decade+ tracks records of annual payout growth.

The key differentiator lies in portfolio composition and growth trajectory. Realty Income prioritizes diversification across property types and geography, accepting slower expansion as the cost of stability. NNN REIT embraces concentrated exposure to U.S. retail, positioning itself to capture more substantial gains from targeted acquisitions.

Making Your REIT Selection

For the dividend-seeking investor, this choice hinges on your appetite for concentrated vs. diversified exposure. Realty Income appeals to those prioritizing established scale and multi-sector balance. NNN REIT attracts investors betting on continued retail recovery and seeking higher near-term growth potential.

The best REIT stock choice ultimately depends on whether you value Realty Income’s fortress-like stability or NNN REIT’s nimble positioning within its narrower U.S. retail focus. Given retail’s demonstrated resilience and NNN REIT’s capacity to deploy capital meaningfully, the case for the latter grows increasingly compelling for growth-oriented income investors.