W
hich REIT is the wiser dividend play – the sprawling, diversified giant or the focused, niche player?
For investors chasing regular income, REITs are attractive because the U.S. tax code forces them to distribute at least 90 % of taxable earnings as dividends. Their business model is simple: acquire properties, lease them, and collect rent. Retail is a common specialty, yet it can strain a REIT during economic downturns. The COVID‑19 shock and the 2022‑23 interest‑rate climb hit many retail REITs hard, as higher borrowing costs made new acquisitions pricier and e‑commerce eroded foot traffic. Still, most have bounced back. In the first nine months of 2025, retail‑focused REITs averaged a 6.9 % return (Nareit data).
Two leaders illustrate the trade‑off: Realty Income (ticker O) and NNN REIT (ticker NNN). Both own thousands of retail sites, but their scales and strategies differ.
**Realty Income**
- Portfolio: 15,540+ properties, ~80 % retail, 15 % industrial, the rest gaming and other uses.
- Retail mix: grocery (≈11 %), convenience (≈10 %), plus home‑improvement and dollar stores.
- Key tenants: Dollar General, Walgreens, Home Depot, Walmart.
- Occupancy: 98.7 %; lease renewals at 3.5 % higher rents.
- AFFO (adjusted funds from operations): up 2.9 % YoY to $1.09 per share.
- Dividend: monthly, raised quarterly for over 30 years; last hike in October raised the payment to $0.2695.
- Yield: 5.7 %.
- Size advantage: large asset base provides stability but limits the ability to acquire high‑growth properties; growth is likely to remain modest.
**NNN REIT**
- Portfolio: ~3,700 properties, mainly convenience stores, automotive services, restaurants, and family entertainment venues.
- Occupancy: 97.5 % in Q3.
- AFFO per share: rose from $0.84 to $0.86.
- Dividend: 36‑year streak of increases; August payment rose 3.4 % to $0.60.
- Yield: 5.9 %.
- Size advantage: smaller scale allows new acquisitions to have a larger impact on growth trajectory.
**Choosing between them**
Both REITs thrive in a retail environment that is relatively insulated from broader economic swings, and both boast long‑standing dividend growth and similar yields. The decision hinges on risk tolerance and growth expectations. Realty Income offers a larger, more diversified, and historically stable platform, while NNN REIT presents a smaller, more focused operation that could deliver higher growth if it continues to add attractive properties. If a higher growth potential outweighs the benefits of scale, NNN REIT may be the preferable pick.
