Finding Top-Yielding REITs: Realty Income and NNN REIT Lead the Recovery

Why REITs Matter for Income Investors

Real estate investment trusts have become increasingly attractive as income sources, particularly now that the retail sector—long considered troubled—is experiencing a genuine recovery. The structure of REITs mandates distribution of at least 90% of taxable income to shareholders, making them naturally aligned with dividend-seeking strategies.

For much of the past few years, retail-focused REITs faced significant headwinds. The pandemic raised questions about brick-and-mortar viability as e-commerce accelerated. Interest rate hikes in 2022-2023 added another layer of pressure, increasing acquisition and refinancing costs. Yet resilience has proven the skeptics wrong.

Through the first nine months of 2025, retail-focused REITs averaged a 6.9% return, signaling genuine market recovery. This backdrop makes the current moment particularly relevant for evaluating individual opportunities.

Realty Income: Scale and Stability in Best-Yielding REITs

Realty Income (NYSE: O) operates approximately 15,540 properties, making it a dominant player among best-yielding REITs. The portfolio composition reveals sophisticated diversification: roughly 80% of rental income flows from retail tenants. Within that retail exposure, grocery stores anchor the portfolio at nearly 11%, followed by convenience stores at 10%. Dollar stores, home improvement retailers, and other merchants round out the retail allocation. Industrial properties represent roughly 15% of income, with gaming and other categories filling the gap.

The tenant roster reads like a who’s who of stable retailers: Dollar General, Walgreens, Home Depot, and Walmart. These aren’t experimental concepts—they’re proven, traffic-driven businesses.

The numbers demonstrate disciplined execution. The 98.7% occupancy rate reflects tight property management. Lease renewals came in 3.5% higher, showing pricing power. Adjusted funds from operations (AFFO), the key cash-available-for-distribution metric for REITs, increased 2.9% year-over-year to $1.09 per diluted share.

What sets Realty Income apart is its dividend trajectory. Since its 1994 IPO, the company has increased dividends quarterly for over three decades—an unmatched track record. Monthly distributions have been hiked several times annually, most recently rising from $0.269 to $0.2695 per share in October. With AFFO projected at $4.25-$4.27 per share for the year against annualized dividend obligations of $3.23, coverage remains secure. The dividend yields 5.7%.

The trade-off? Scale itself. At 15,000-plus properties, Realty Income faces mathematical reality: percentage-growth rates naturally moderate. The company will likely deliver steady, predictable returns rather than explosive growth.

NNN REIT: Smaller Footprint, Concentrated Opportunity

NNN REIT (NYSE: NNN) operates 3,700 properties across diverse retail sectors—convenience stores, automotive service centers, restaurants, family entertainment venues, and specialized retailers. Though smaller, this portfolio demonstrates exceptional tenant management skill: the third-quarter occupancy rate held at 97.5%.

Quarterly AFFO per share moved from $0.84 to $0.86, showing positive momentum. NNN REIT maintains its own impressive dividend legacy—36 consecutive annual increases. The most recent hike raised the payment by 3.4% to $0.60 per share in August. Management guidance projects AFFO of $3.41-$3.45 per share, comfortably covering the elevated distribution. This best-yielding REIT currently offers a 5.9% dividend yield.

Size becomes an advantage rather than limitation at NNN REIT’s stage. A single significant property acquisition or development still meaningfully impacts growth metrics. The company remains positioned for above-average expansion compared to peer behemoths.

Making Your Move: Which Best-Yielding REIT Fits Your Strategy?

Both companies have navigated treacherous years by anchoring portfolios to recession-resistant business models. Neither would exist today if their tenants were inherently fragile. The retail property managers they partner with have demonstrated staying power.

The dividend yields barely differ—5.7% versus 5.9%—making yield not the deciding factor. Coverage is similarly secure at both organizations, with healthy AFFO multiples relative to distributions.

The choice reduces to philosophy: Realty Income offers established, diversified stability across thousands of properties and broader asset classes. For growth-oriented investors willing to accept smaller scale and narrower diversification, NNN REIT presents more compelling expansion potential, particularly as U.S. retail continues normalizing.

For those hunting best-yielding REITs today, both merit consideration depending on whether you prioritize blue-chip stability or proportionally higher growth prospects.