Two Top Real Estate Stocks to Buy: Comparing Realty Income and NNN REIT

Investors seeking consistent income should explore real estate stocks, particularly those structured as REITs. The REIT model mandates distributing at least 90% of taxable income to shareholders, making them attractive for dividend-focused portfolios. Among the various property types, retail-focused real estate stocks have faced skepticism, yet they’ve demonstrated remarkable resilience.

The retail REIT sector encountered significant headwinds during the pandemic and through the 2022-2023 period when rising interest rates pressured property valuations. However, market data tells a compelling story: during the first nine months of 2025, retail-focused REITs delivered an average 6.9% return, according to Nareit. This recovery underscores why many investors are reconsidering real estate stocks as a cornerstone of their investment strategy.

Market Recovery and Resilience of Retail Real Estate

The narrative around retail properties has shifted dramatically. Concerns about e-commerce disruption and rising debt service costs proved manageable for well-operated real estate stocks. Companies that maintained disciplined tenant selection and lease negotiations weathered downturns effectively. Today’s environment presents compelling opportunities for those exploring real estate stocks to buy.

Realty Income: The Established Giant in Real Estate Stocks

Realty Income (NYSE: O) operates one of the most diversified real estate stock portfolios, with over 15,500 properties generating approximately 80% of rental income from retail tenants. Its tenant base includes household names like Dollar General, Walgreens, Home Depot, and Walmart, providing stability across economic cycles.

The company maintains a 98.7% occupancy rate and successfully renewed leases at 3.5% higher rates during 2025. Its adjusted funds from operations (AFFO) per share reached $1.09, reflecting a 2.9% year-over-year increase. Management projects 2025 AFFO will land between $4.25-$4.27 per share, comfortably covering the annualized dividend of $3.23 per share.

The monthly dividend—raised in October to $0.2695 per share—has been increased quarterly for over 30 years since the company’s 1994 IPO. The current dividend yield stands at 5.7%, attracting income-focused investors. The primary consideration for real estate stocks of Realty Income’s scale is growth limitation; acquiring properties that meaningfully move the needle becomes increasingly challenging when you already own 15,000-plus properties.

NNN REIT: Focused Real Estate Stocks with Growth Potential

NNN REIT (NYSE: NNN) operates nearly 3,700 properties across retail segments including convenience stores, automotive services, and family entertainment centers. While smaller than Realty Income, this focused approach offers distinct advantages among real estate stocks.

The company achieved a 97.5% occupancy rate in Q3 2025, with AFFO per share climbing from $0.84 to $0.86. Its dividend history spans 36 years, with an August 2025 increase of 3.4% to $0.60 per share. Management forecasts full-year AFFO between $3.41-$3.45 per share, providing substantial dividend coverage.

With a dividend yield of 5.9%, NNN REIT offers slightly higher income than its larger competitor. Critically, the smaller size of this real estate stock presents a growth advantage—new property investments can still meaningfully accelerate development. This characteristic distinguishes NNN REIT when comparing real estate stocks for both income and appreciation potential.

Evaluating Real Estate Stocks: Key Metrics Comparison

Both companies demonstrate excellence in hostile retail environments by investing in recession-resistant tenants. Their competitive advantages differ subtly: Realty Income emphasizes diversification and scale, while NNN REIT prioritizes focused exposure with higher growth velocity.

The dividend yields are nearly equivalent (5.7% vs 5.9%), and both maintain enviable payout increase streaks exceeding three decades. From a tenant quality perspective, each maintains high occupancy rates and strong lease renewal economics.

Which Real Estate Stocks to Buy?

The decision between these two real estate stocks hinges on investment philosophy. Realty Income appeals to those prioritizing stability, diversification, and the track record of a mature REIT with established infrastructure. Its massive portfolio limits downside risk but also constrains explosive growth.

NNN REIT suits investors comfortable with less diversification in exchange for concentrated retail exposure and superior growth prospects. The company’s disciplined property selection has positioned it favorably as consolidation trends continue in retail real estate.

For most investors exploring real estate stocks to buy now, the choice depends on whether you value Realty Income’s established position and defensive characteristics or prefer NNN REIT’s growth trajectory and higher yield. Both represent quality real estate stocks worthy of consideration within a dividend-focused investment strategy.