Key Takeaways
- Realty Income yields 5.7% and NNN REIT yields 6.0%, and both reported third-quarter results in early November.
- Both dividends are well-covered, with AFFO payout ratios of 75% for Realty Income and 69% for NNN REIT in fiscal 2025.
- Realty Income has grown its dividend a bit faster, at 2.9% a year from fiscal 2020 to fiscal 2025 against 2.7% for NNN REIT.
- Realty Income raised its 2026 AFFO guidance and NNN REIT held its own, so both payouts head into 2027 on solid footing.
Realty Income (O) and NNN REIT (NNN) both reported third-quarter results this week, and income investors got what they wanted from each: steady dividends and a 2026 outlook that held up.
Realty Income raised its AFFO guidance on Nov. 2, and NNN REIT kept its guidance unchanged two days later. With yields of 5.7% and 6.0%, the two checks are close. So which is the better dividend stock?
| Metric | Realty Income (O) | NNN REIT (NNN) |
|---|---|---|
| Dividend yield | 5.7% | 6.0% |
| Dividend growth, fiscal 2020-2025 | 2.9% a year | 2.7% a year |
| Dividend raises (company’s count) | Over 32 consecutive years | 37 consecutive years |
| AFFO payout ratio, fiscal 2025 | 75% | 69% |
| AFFO payout ratio, fiscal 2026 consensus | 73% | 68% |
| Net debt / EBITDA | 5.7x | 5.8x |
| Interest coverage | 2.4x | 2.8x |
Source: TIKR, Nov. 5, 2026; raise records are each company’s own count.
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Realty Income is reaching for industrial and Europe
Realty Income is putting more of its money into industrial property and Europe. Of the $2.6 billion it invested in the third quarter, industrial was the biggest slice at $1.15 billion, and Europe made up 42% of its pro-rata volume at a 7.1% yield. It’s also issuing less new stock to pay for those deals: public equity funded 19% of its investment so far this year, against a 47% three-year average.
AFFO per share has grown faster than the dividend over the past decade, so the AFFO payout ratio fell from 83.0% in fiscal 2016 to 75.2% in fiscal 2025:
Third-quarter AFFO came in at $1.12 a share, up 3.7% from a year earlier. In September, Realty Income announced its 136th dividend increase since listing on the NYSE in 1994, which lifted its monthly payment to $0.2715 a share from $0.2710. Against consensus for fiscal 2026, that payout works out to a well-covered 73%.
The main risk is refinancing: about $2.9 billion of debt comes due in 2027 at a rate under 3%, and today’s rates are higher.
NNN REIT keeps more in reserve
NNN REIT is growing its earnings faster right now than Realty Income is. Third-quarter AFFO rose 5.8% to $0.91 a share, annualized base rent climbed 6.8% to $974.0 million, and occupancy reached 99.2%. NNN REIT held its 2026 AFFO guidance at $3.55-$3.59 a share and lowered its bad-debt forecast to about 25 basis points of rent, from 40.
Its coverage has improved over the decade too. The AFFO payout ratio slipped from 73.9% in fiscal 2016 to 68.6% in fiscal 2025. In fiscal 2020, AFFO per share fell to $2.51 from $2.80, and the dividend still rose, to $2.07 from $2.03:
As CFO Vincent Chao said on the third-quarter call, decades of rate and economic cycles have “allowed us to continue to raise that dividend year in, year out regardless of what’s going on around us.”
On Oct. 15, the board declared $0.62 a share for the quarter again, holding the rate it set in July after a 3.3% raise from $0.60. That raise was NNN REIT’s 37th annual increase in a row. Its forward payout ratio is a comfortable 68%, and the cash it keeps backs management’s plan to fund deals without issuing new stock.
The risks are tenants under consumer pressure, such as Camping World and Dave & Buster’s, and a $350 million bond due in December. NNN REIT has $1.4 billion of available liquidity to cover that bond.
So which dividend wins?
NNN REIT is the better dividend stock. It pays more today, with a 6.0% yield against 5.7%, and it covers that dividend with more room: 68% of forecast 2026 AFFO, against 73% for Realty Income.
Realty Income’s faster dividend growth doesn’t close that gap for a long time. At each company’s 5-year rate, $10,000 in NNN REIT would pay about $760 in year 10, a 7.6% yield on your cash. Realty Income would pay about $738, and its income wouldn’t pass NNN REIT’s until about 2047.
You also pay less for NNN REIT’s dividend. It trades at 12x forward AFFO, against 13x for Realty Income and below its own five-year average of 13x:
Realty Income’s dividend is still very safe. It pays monthly and has raised its payout for over 32 consecutive years. Its portfolio is spreading into faster-growing corners, and its leverage is a touch lower. In the end, though, NNN REIT pays a bigger check with more room to spare, and at a lower price.
Of course, Realty Income is sticking with its $10.0 billion investment target for 2026. If that spending pushes its AFFO growth well past NNN REIT’s, the gap in dividend growth could widen faster than these rates suggest.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
