3 Net Lease REITs That Could Keep Sending Investors Dividend Checks for Years
Three net lease REITs are buying properties at spreads well above Treasury yields and quietly building cash reserves, but rising rates are forcing a refinancing reckoning that will separate the dividend survivors from the ones that quietly stumble.
Net lease and retail REITs own single-tenant buildings where the tenant pays taxes, insurance and maintenance. Right now the business is driven by sale-leaseback demand: operators sell their real estate to raise growth capital, then lease it back. The three companies below each bought property in the second quarter of 2026 at initial cash cap rates between 7.3% and 7.8%, while the 10-year Treasury sits at 5.22%. Each of the three operates as an equity REIT.
They own the property and collect rent, so they avoid the direct mortgage-credit risk that mortgage REITs carry. Dividend safety here is measured using AFFO. AFFO adds back non-cash depreciation and strips out one-time charges, which makes it a far better guide to cash available for dividends than a GAAP earnings payout ratio.
NNN REIT: 37 Straight Annual Raises and an Ultra-High Yield
NNN REIT (NYSE:NNN) owns 3,774 freestanding single-tenant retail properties. Occupancy reached 99.1%, up 110 bps year over year, with a 10.1-year weighted average remaining lease term. Annualized base rent rose 7.3% to $959.1M. In the second quarter it bought 89 properties for $291.0M at a 7.3% initial cash cap rate, with a 17.9-year weighted average lease term. The buying was mostly in auto service, discount retail and early childhood education.
Yield: The quarterly dividend is $0.62, or $2.48 annualized. At $40.57, that works out to 6.11%, which puts NNN in ultra-high-yield territory. Part of that yield comes from a falling share price. The stock traded at $47.17 when Q2 results were filed and has dropped 7.52% in the past month.
AFFO coverage: Management put the AFFO payout ratio at 69% on the new dividend. Per-share AFFO rose 5.9% to $0.90. Full-year AFFO guidance went up for the second time this year, to $3.55–$3.59. NNN kept about $56 million of free cash flow after the dividend in the quarter and expects $215 million for 2026.
Bull case: This year’s raise was the 37th consecutive annual increase. Management says only three REITs have matched that record. Overdue rent was under five basis points, expected full-year bad debt fell to about 40 basis points, and the company had no pledged assets at quarter-end.
Risk: NNN has $350 million of debt due in December 2026. Management quoted indicative 10-year pricing of “mid-5 to 5.6%”, and quarterly interest expense already rose to $53.5M from $49.3M.
Realty Income: Monthly Checks Backed by an A Rating
Realty Income (NYSE:O) is the giant of the group. Its portfolio spans retail, industrial, gaming and data centers across several countries. Occupancy stood at 98.8%, re-leased properties recovered 102.7% of prior rent, while same-store rent growth was 1.2%. Q2 investments amounted about $2.6B at a 7.3% initial cash yield, and industrial made up roughly 65% of global real estate investment. Realty Income also announced a $6 billion hyperscale data center joint venture with Cloud Capital. It expects to invest up to $1.4 billion for a 45% stake.
Yield: The latest monthly dividend is $0.2715, payable October 15, 2026, for an annualized forward rate of $3.258. At $55.16, the yield is 5.91%. That’s high-yield and just below the ultra-high threshold. Q2 also brought the 115th consecutive quarterly increase.
AFFO coverage: Second-quarter dividends of $0.8115 against AFFO of $1.09 per share give an AFFO payout ratio of 74.4%. Realty Income shows why AFFO is the right yardstick. GAAP EPS was just $0.37 after $54.2M of impairments, well below the dividend, but the cash-based measure covers the payout easily. Full-year AFFO guidance rose to $4.44–$4.45.
Bull case: Fitch assigned an ‘A’ issuer rating, and pro forma liquidity exceeded $5.7 billion. Private capital is cutting the need to sell new shares. Public equity funded 18% of investment volume year to date, compared with a 47% average over the past three years. Management targets about 150 basis points of spread over its cost of capital, a level one Barron’s podcast guest called “really strong” for net lease spread investors.
Risk: Tenants without investment-grade ratings account for 65.7% of annualized base rent. The watch list sits in the high 5% area across 137 tenants, concentrated in home furnishings and casual dining. With same-store growth at 1.2%, future dividend growth depends heavily on buying more property.
Essential Properties Realty Trust: Lowest Yield, Thickest Cushion
Essential Properties Realty Trust (NYSE:EPRT) owns 2,493 properties leased to middle-market service and experience businesses: car washes, medical and dental offices, early childhood education, quick-service restaurants and fitness. Occupancy is 99.6%, the weighted average lease term is 14.3 years, and tenants earn 3.5x their rent at the unit level. Same-store rent grew 1.5%. Q2 investments amounted $332.4M across 103 properties at a 7.8% cash cap rate. Of that volume, 84% was sale-leasebacks and 72% came from existing tenant relationships.
Yield: The quarterly dividend is $0.32, or $1.28 annualized. At $25.79, that is a 4.96% yield. Shares are down 10.12% year to date.
AFFO coverage: The AFFO payout ratio is 64%, the lowest of the three. That left $43 million of retained free cash flow in the quarter, or roughly $170 million annualized. Per-share AFFO rose 9% to $0.50. Guidance moved up to $2.01–$2.05, which management says implies growth of over 7% at the midpoint.
Bull case: Essential Properties pairs the fastest AFFO growth in the group with the lowest leverage: 3.5 times pro forma, backed by ~$1.7B of liquidity and about $575 million of pending forward equity. Management said capital needs are largely covered through 2026 and well into 2027. It also says pipeline cap rates remain in the “mid to high 7% range”.
Risk: A $430M term loan carrying about 2.3% matures in February 2027. The company’s latest 10-year notes priced at 5.375%, and management estimates refinancing will cut 2027 AFFO by about 4 to 6 cents per share.
Which Rent Check Holds Up Best
NNN currently pays the most income today, backed by 37 years of raises and a 69% AFFO payout. Realty Income offers monthly checks and the strongest balance sheet, but its coverage is the lowest of the three at 74.4%. Essential Properties yields the least, keeps the most cash and grows AFFO fastest. The next test for all three is refinancing upcoming debt with the 10-year Treasury above 5.00%.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
