Net lease REITs are the closest thing to a bond with dividend growth in the equity market. The tenant pays rent, property taxes, insurance, and maintenance. The REIT collects a contracted check. Leases run 10, 15, or 20 years. The yield is high, the visibility is exceptional, and the compounding over time rewards patient income investors.
Realty Income (O) and NNN REIT are the two most-discussed net lease names. Both pay dividends monthly — not quarterly, monthly — which makes them particular favorites for retirees and income-focused investors. Both have long histories of consecutive raises. And both are significantly impacted by interest rates, which creates the most predictable Weiss undervalue signals in the entire equity market.
The Monthly Dividend Companies
Realty Income (O) calls itself "The Monthly Dividend Company" — a marketing claim backed by a genuine record. As of 2026, O has made over 640 consecutive monthly dividend payments and raised the dividend more than 120 times since its 1994 NYSE listing. The portfolio spans over 15,000 properties leased to more than 1,300 tenants across retail, industrial, and European real estate.
Scale matters in net lease. Realty Income's size gives it access to large sale-leaseback transactions that smaller REITs can't do, better financing rates, and more diversification across tenant and geography. The flip side: at that scale, growth requires increasingly large deals. The recent acquisition of Spirit Realty and European expansion are attempts to continue growing a portfolio that is simply enormous.
NNN REIT (formerly National Retail Properties) is smaller, more focused, and arguably simpler. NNN concentrates almost entirely on single-tenant retail properties leased to necessity-based tenants — convenience stores, auto parts retailers, restaurant chains, service businesses. The portfolio is smaller (~3,500 properties) but similarly diversified across tenants.
NNN has raised its dividend for 35+ consecutive years — qualifying it as a Dividend Aristocrat — a streak that rivals Realty Income's and surpasses most REITs in the sector.
Understanding REIT Dividend Math
Standard payout ratios are meaningless for REITs. Because real estate depreciation is a non-cash charge that reduces reported earnings, REIT earnings per share routinely look like they don't cover the dividend. They do — you just can't see it from GAAP EPS.
The correct measure is AFFO payout ratio (Adjusted Funds From Operations — essentially operating cash flow per share minus maintenance capex). Both O and NNN have consistently maintained AFFO payout ratios in the 70–85% range, which is normal and sustainable for the sector.
What matters for dividend safety: tenant quality, lease duration, occupancy, and the ability to refinance debt at reasonable rates. All three are worth monitoring for both companies.
Interest Rate Sensitivity: The Weiss Opportunity
This is the most important dynamic for Weiss-method investors in REIT stocks.
When interest rates rise, net lease REIT prices fall mechanically. Investors compare the 4–5% dividend yield to Treasury bonds — if the 10-year reaches 4.5–5%, the relative attractiveness of REITs diminishes and institutional money rotates. Prices drop, yields rise, and Weiss signals flash Undervalued.
This is not a business problem. Realty Income and NNN are still collecting rents, signing new leases at higher rates (which benefits long-term income), and maintaining their dividends. The stock is cheap because of macro flows, not because anything is wrong with the company.
The 2022–2023 rate-hike cycle drove both O and NNN to yields not seen since 2013–2014. For investors who understood that the dividend was not at risk, this was one of the clearest Weiss entry points of the decade.
The key insight: when the Fed hikes rates aggressively, net lease REITs almost always become Weiss undervalued. When rates stabilize or fall, they return to fair value or overvalued. This is a more predictable cycle than most equity signals.
Yield Ranges: How They Compare
Realty Income's 10-year yield range has typically spanned roughly 3.8% to 6.5%, with the high end reached during peak rate-hike fear in 2023. The median sits around 4.5–5.0%. The yield is structurally high because REITs must distribute 90%+ of taxable income — this is a sector-wide characteristic, not a sign of stress.
NNN's 10-year yield range has run similarly — roughly 3.8% to 6.5%+, with a comparable median. NNN has historically traded at a slight yield premium to O — investors have paid a modest premium for Realty Income's size, liquidity, and brand recognition. When that premium disappears (NNN yields more than O), it has historically represented an NNN-specific entry opportunity.
Check current signals for both:
How to Choose Between Them
Realty Income (O) if:
- You want maximum liquidity and the largest, most institutionally-held net lease REIT
- You value the global diversification (European properties add a non-US income stream)
- You want the track record of 640+ consecutive monthly payments
- You're comparing to Treasuries and want the most bond-like equity behavior
NNN REIT if:
- You want a simpler, purer US retail-focused net lease portfolio
- You're comfortable with a slightly smaller company in exchange for a potentially higher yield
- You believe the 35+ year dividend growth streak warrants more recognition than the market currently gives it
- You want to buy at a discount to Realty Income on a relative basis
The practical answer for most investors: hold both. Size them as a combined net lease allocation (say, 3–4% of portfolio total, split between O and NNN). Run the Weiss comparison periodically — whichever is more undervalued relative to its own history gets the next dollar of capital.
The interest rate cycle will create entry opportunities in both. The monthly income, growing slowly but consistently, compounds quietly in the background. That is exactly what net lease REITs are designed to do.
Both are covered in the REITs collection on DividendVisual.
This article is for informational purposes only and does not constitute financial advice. REIT valuations are sensitive to interest rates and credit market conditions. Always review current AFFO coverage and occupancy data before making investment decisions.