Top REITs for Income Investors: Realty Income and NNN REIT Compared

When seeking best REITs to invest in for reliable income, the retail sector often gets overlooked due to past concerns. However, recent performance shows these fears were largely overblown. For income-focused investors, two standout opportunities emerge in this space: companies that generate substantial cash flow from thousands of properties leased to retailers nationwide.

REITs offer an attractive tax structure that requires them to distribute at least 90% of taxable income to shareholders as dividends. They accomplish this by acquiring and managing diverse property types—retail, industrial, office—then leasing them to tenants and collecting rent payments. The retail segment historically caused concern during economic downturns, particularly when e-commerce expansion threatened physical stores during the COVID-19 pandemic. Additionally, rising interest rates in 2022-2023 pressured the sector, since higher borrowing costs reduce affordability for property acquisitions.

Despite these headwinds, many REITs navigated successfully through recent challenges and achieved full recovery. During 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). For investors evaluating best REITs to invest in right now, two leaders merit serious consideration.

Why NNN REIT Stands Out in the Retail Sector

NNN REIT operates with approximately 3,700 properties leased to retailers spanning convenience stores, automotive services, restaurants, and entertainment venues. The company demonstrates strong tenant management capabilities, maintaining a 97.5% occupancy rate in the third quarter.

From a financial performance standpoint, quarterly adjusted funds from operations (AFFO) per share increased from $0.84 to $0.86—a metric that measures cash available for dividend distribution. Management projects full-year AFFO will reach $3.41 to $3.45 per share, providing solid coverage for the elevated dividend payments.

NNN REIT’s dividend track record spans 36 consecutive years of increases, with the most recent bump hiking the August payment to $0.60 per share, representing a 3.4% raise. The current dividend yield stands at 5.9%. Perhaps most importantly, the company’s relatively smaller footprint compared to larger competitors allows new property investments to meaningfully impact growth trajectories. This positions NNN REIT as an appealing choice among best REITs to invest in for those seeking meaningful capital appreciation alongside income.

Realty Income’s Strength: Scale and Stability in Retail

Realty Income operates a substantially larger portfolio of 15,540-plus properties, deriving approximately 80% of annual rental income from retail tenants. The portfolio composition includes grocery stores (nearly 11%), convenience stores (10%), home improvement retailers, and dollar store operators. Its largest tenants include Dollar General, Walgreens, Home Depot, and Walmart.

The company maintains a 98.7% occupancy rate and successfully renewed leases at 3.5% higher rental rates—testament to sound property management in a competitive environment. Adjusted funds from operations increased 2.9% year-over-year to $1.09 per diluted share.

Realty Income’s dividend represents perhaps its most impressive feature: the board has increased distributions quarterly for over three decades since the company’s 1994 IPO. Paid monthly, the dividend typically receives multiple annual increases. Recently, Realty Income raised its monthly per-share payout in October from $0.269 to $0.2695. Management projects 2025 AFFO per share between $4.25-$4.27, comfortably covering the annualized $3.23 dividend. The stock currently offers a 5.7% dividend yield.

However, Realty Income’s massive scale presents a potential limitation: acquiring additional properties that register as meaningful growth drivers becomes increasingly difficult when you already own 15,000 properties. Investors should anticipate steady, measured growth rather than dramatic expansion.

How to Choose: Weighing Growth vs. Diversification

Selecting among best REITs to invest in requires balancing multiple considerations. Both companies have demonstrated the ability to thrive in challenging retail environments by focusing on resilient business categories—those less vulnerable to economic cycles. Each boasts impressive dividend histories extending beyond 30 years with consistent annual increases, and both offer comparable dividend yields around 5.7-5.9%.

The fundamental distinction lies in investment approach. Realty Income represents the established, diversified giant: more stability, broader sector exposure, proven long-term performance. NNN REIT embodies the more focused, U.S. retail-concentrated strategy with tangible room for growth as the portfolio expands.

For investors prioritizing stability and predictability, Realty Income delivers a proven formula refined across three decades. For those comfortable with less diversification in exchange for meaningful growth potential, NNN REIT’s concentrated approach within the retail sector offers compelling opportunity.

When evaluating best REITs to invest in for your portfolio, consider your personal tolerance for growth volatility versus preference for established predictability. Both companies have demonstrated they can navigate economic uncertainty while rewarding shareholders with steadily increasing income streams.