realty income (O 0.28%) And nnn reit (nnn 0.21%) Two of the best dividend growth track records in the real estate investment trust (REIT) sector. NNN REIT has increased its dividend for 36 consecutive years, while Realty Income’s streak is 31 consecutive years. They also offer attractive dividend yields (5.3% for Realty Income and 5.6% for NNN REIT).
Take a look at which of these high dividend reit It is a better buy for income investors right now.
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How are these REITs similar?
Realty Income and NNN REIT have some surprising similarities. Both focus on owning single-tenant net-lease properties. Net leases generate very stable rental income because tenants cover all property operating costs, including real estate taxes, routine maintenance and building insurance. They also focus primarily on leasing properties to retail tenants. NNN REIT focuses exclusively on owning retail real estate, with 79% of Realty’s income coming from rentals to retailers.
Both REITs His financial profile is also very strong. Realty Income has a strong balance sheet (A3/A-credit rating with 5.4x leverage ratio) and a conservative dividend payout ratio (75.2% at the end of last year). Meanwhile, NNN REIT’s balance sheet is almost as strong (5.6x leverage ratio with a BBB+/Baa1 credit rating and sector-leading 10.8-year weighted-average debt maturity). It has an even more conservative payout ratio (68.8%). Both REITs have the financial flexibility to continue investing in income-producing real estate.
today’s change
(-0.28%) $-0.17
current price
$60.29
key data points
market cap
$56B
day limit
$60.29 -$60.74
52wk range
$50.71 -$67.94
volume
17K
average volume
6.6M
gross margin
48.73%
dividend yield
5.34%
How are these REITs different?
Although there are many similarities between these two REITs, there are also important differences. Realty Income’s portfolio is much more diverse. In addition to owning retail properties, it also invests in industrial (15.4% of its rentals), gaming (3.1%), and other properties, such as data centers (2.4%). Realty Income also has high geographic diversity, with properties in several European countries and recently expanding into Mexico. Realty Income’s diversification has given it greater flexibility to focus on the best investment opportunities. For example, it invested more heavily in Europe last year, where it achieved higher initial weighted-average cash yields. Realty Income also has more diverse funding sources, having launched a US private capital fund and several strategic investment partnerships in the past year.
today’s change
(-0.21%) $-0.09
current price
$42.27
key data points
market cap
$8.0B
day limit
$42.27 -$42.53
52wk range
$35.80 -$46.03
volume
892
average volume
1.5M
gross margin
66.98%
dividend yield
5.62%
There are also significant differences regarding their dividends. NNN REIT pays quarterly dividends, as most companies do, while Realty Income pays monthly dividend. Meanwhile, NNN REIT typically raises its dividend once a year, while Realty Income raises its dividend more frequently. It recently announced its 134th dividend increase since its public market listing. It has also increased its payout to 114 quarters in a row.
realty income stands Outside
NNN REIT is a great dividend stock. This is a solid choice for investors seeking a slightly higher current yield backed by high-quality retail real estate. However, Realty Income stands out as a better buy due to its more diversified portfolio, stronger balance sheet and steadily rising monthly dividend.
Matt DeLallo There are positions in NNN REIT and Realty Income. The Motley Fool has positions in and recommends NNN REIT and Realty Income. The Motley Fool has one Disclosure Policy.