Retail REIT Showdown: Why These Two Dividend Giants Are Winning in 2025

Retail REITs have shaken off years of doubt. Once plagued by concerns about e-commerce cannibalization and rising interest rates, the sector has staged a remarkable recovery. For the first nine months of 2025, retail-focused REITs delivered an average return of 6.9%, according to the National Association of Real Estate Investment Trusts (Nareit). Among the standouts are two major players: Realty Income (NYSE: O) and NNN REIT (NYSE: NNN). Both have thousands of retail properties and proven track records of shareholder payouts. But they take different approaches to growth and diversification.

Understanding the REIT Dividend Appeal

Before diving into the comparison, it’s worth noting why REITs attract dividend-hungry investors. The tax structure mandates that REITs distribute at least 90% of taxable income to shareholders. This makes them naturally suited for income strategies. Realty Income and NNN REIT both exemplify this model, though their execution differs.

NNN REIT: Smaller, Sharper, Faster-Growing

NNN REIT operates a more concentrated portfolio of approximately 3,700 properties. This focused approach—concentrated entirely on U.S. retail—creates an advantage: new investments can meaningfully accelerate growth metrics. The company leases to diverse retail segments: convenience stores, automotive service centers, restaurants, and family entertainment venues.

The Numbers Behind NNN

Recent performance shows momentum. In the third quarter, NNN maintained a 97.5% occupancy rate, signaling healthy tenant retention. More impressively, quarterly adjusted funds from operations (AFFO) per share climbed from $0.84 to $0.86—a measure that directly reflects cash available for distribution.

The dividend track record is substantial. NNN has raised distributions for 36 consecutive years. The August increase to $0.60 per share represented a 3.4% hike. With management projecting annual AFFO between $3.41 and $3.45 per share, current payouts are well-covered. The stock currently yields 5.9%.

The smaller asset base means NNN can still identify and acquire high-return properties. For investors seeking capital appreciation alongside income, this matters.

Realty Income: Diversified, Established, Steady

Realty Income operates at a different scale entirely: 15,540-plus properties generating roughly 80% of annual rent from retail operations. Grocery stores (11% of portfolio), convenience stores (10%), and other retailers like Home Depot and Walmart anchor the mix. Industrial properties contribute 15%, with gaming and other sectors filling the remainder.

Performance and Stability

Realty Income’s occupancy rate sits at 98.7%—exceptionally high. The company renewed leases at an average 3.5% increase, demonstrating pricing power even in a competitive environment. Adjusted AFFO per share reached $1.09, up 2.9% year-over-year.

On the dividend front, Realty Income has increased payouts quarterly for over three decades, dating to its 1994 IPO. These aren’t annual increases—the company raises its monthly per-share distribution multiple times yearly. The most recent bump came in October, moving the monthly payout from $0.269 to $0.2695. With annual AFFO projected at $4.25 to $4.27 per share and annual dividends of $3.23 per share, coverage is robust. The yield stands at 5.7%.

The Trade-Off: Growth vs. Stability

The core distinction becomes clear through this lens: Realty Income is a massive, established entity where new property acquisitions must be enormous to noticeably impact growth rates. With 15,000+ properties already in hand, incremental deals produce incremental returns. For some investors, this predictability is the whole appeal—slow, reliable, diversified income.

NNN REIT, by contrast, remains nimble. Its smaller footprint means new capital deployment can move growth needles more dramatically. The trade-off is less diversification—it’s purely U.S. retail with no industrial exposure.

Why Retail REITs Survived and Thrived

Both companies prove that well-managed retail REITs can weather storms. They invest in properties leasing to businesses relatively insulated from economic volatility: grocers, pharmacies, service stations, quick-service restaurants. When e-commerce threatened retail in the early pandemic years, these tenants remained essential. When interest rates soared in 2022-2023, both companies demonstrated resilience through pricing power and tenant quality.

The Investment Decision

Choosing between them depends on your priorities. Realty Income appeals to investors prioritizing stability, diversification, and a proven management track record spanning decades. Its 5.7% yield provides solid income with less volatility.

NNN REIT suits investors comfortable with a more concentrated bet on U.S. retail, seeking higher growth potential from an emerging but strong platform. Its 5.9% yield is modestly higher, and its smaller size suggests greater upside if execution remains strong.

Both have demonstrated exceptional discipline in tenant selection and lease management. Both have raised dividends for over 30 years—a feat reflecting financial strength and strategic acumen. Similar yields make the decision less about income level and more about growth trajectory and diversification preferences.

For investors prioritizing total return potential over pure stability, NNN REIT’s positioned better. Its concentrated focus on high-quality U.S. retail properties, combined with room for portfolio expansion, suggests meaningful capital appreciation alongside solid dividends. Realty Income remains the safer harbor—ideal for those already wealthy enough to prioritize reliability over rapid growth.