REITs Making a Comeback: Which Retail-Focused Giant Should Investors Pick?

Why REITs Are Back in Investors’ Radar

Real estate investment trusts (REITs) have weathered the storm. After struggling through the pandemic and interest rate hikes in 2022-2023, retail-focused REITs are showing impressive recovery. For the first nine months of 2025, this sector averaged a 6.9% return, signaling renewed investor confidence.

The appeal is straightforward: REITs must distribute at least 90% of taxable income as dividends by law. For income-focused investors, this structural advantage is hard to ignore, especially when dividend yields hover around 5.7%-5.9%.

But not all REITs are created equal. When comparing Realty Income (NYSE: O) and NNN REIT (NYSE: NNN), two heavyweights in the retail REIT space, the choice becomes more nuanced.

The Scale Factor: Realty Income’s Massive Portfolio vs. NNN’s Focused Approach

Realty Income operates 15,540+ properties with roughly 80% of revenue flowing from retail tenants. Its tenant roster reads like a retail all-star list: Dollar General, Walgreens, Home Depot, and Walmart. Grocery stores (11% of portfolio) and convenience stores (10%) form the backbone, with exposure to home improvement and dollar retailers rounding out the mix.

NNN REIT takes a leaner approach, managing nearly 3,700 properties concentrated in U.S. retail. Its portfolio spans convenience stores, automotive services, restaurants, and family entertainment venues.

The occupancy rates tell the story: Realty Income sits at 98.7%, while NNN REIT holds 97.5% in Q3. Both are strong, but Realty Income’s scale provides a stability moat.

Breaking Down the Numbers: Dividend Coverage and Growth Potential

Here’s where the metrics matter:

Realty Income’s Performance:

• AFFO per share: $1.09 (up 2.9% year-over-year)
• Projected 2025 AFFO: $4.25-$4.27 per share
• Annualized dividend: $3.23 per share
• Dividend yield: 5.7%
• Lease renewal rate: +3.5%

NNN REIT’s Performance:

• Quarterly AFFO: $0.86 per share (up from $0.84)
• Projected AFFO: $3.41-$3.45 per share
• Recent dividend increase: +3.4% to $0.60 per share
• Dividend yield: 5.9%
• Dividend track record: 36 consecutive years of increases

Both are rock-solid on dividend safety—their AFFO projections easily cover distributions. The difference lies in growth trajectory. Realty Income’s sheer size makes adding significant growth tougher; adding property investments to a 15,000+ portfolio requires massive capital deployment to move the needle. NNN REIT, being smaller, has more runway for meaningful property acquisitions that can drive expansion.

The Dividend Loyalty Test: Three Decades of Commitment

Realty Income has been on a dividend-raising streak since its 1994 IPO—over three decades of consistent increases. Most recent bump: October’s raise from $0.269 to $0.2695 per share (paid monthly).

NNN REIT matches this commitment with 36 consecutive years of dividend hikes, including its August increase to $0.60 per share.

This consistency matters. It signals management confidence in tenant quality and cash generation, even when retail faces headwinds.

The Real Tension: Diversification vs. Growth

Realty Income’s advantage: Massive diversification across property types and tenant sectors reduces idiosyncratic risk. Industrial properties (15% of portfolio) plus gaming and other categories provide a cushion against retail cyclicality.

Realty Income’s limitation: That same scale makes explosive growth unlikely. Patient capital that values steady compounding finds this appealing; growth-hungry investors may find it underwhelming.

NNN REIT’s advantage: Smaller size means targeted property investments can still meaningfully accelerate growth. Each new acquisition carries more impact on returns.

NNN REIT’s limitation: Narrower focus on U.S. retail properties means less diversification. Economic downturns affecting retail could have outsized impact.

Which REIT Fits Your Investment Philosophy?

Both companies have proven they can thrive in a challenging retail environment by partnering with recession-resistant businesses. Both boast similar yield profiles and fortress-level dividend safety.

The decision hinges on your risk-reward preference:

• Choose Realty Income if you prioritize stability, predictability, and maximum diversification across property types and geographies. Accept that growth will be measured rather than meteoric.

• Choose NNN REIT if you believe smaller size unlocks superior growth potential and you’re comfortable with a more concentrated retail-focused thesis. The incremental dividend yield advantage (5.9% vs. 5.7%) sweetens the deal.

Personally? The growth optionality tilts the scales toward NNN REIT—but only if you can stomach less diversification. For risk-averse income investors, Realty Income’s 15,000+ property moat wins.

The bottom line: Both REITs have weathered the retail apocalypse narrative and emerged stronger. Your choice depends on whether you’re building an income fortress (Realty Income) or seeking modest growth with dividend security (NNN REIT).