Realty Income and Agree Realty Both Raised Guidance. Which Dividend Looks Stronger?

Realty Income (NYSE:O) and Agree Realty (NYSE:ADC) both send shareholders a dividend check every month, and both raised 2026 AFFO guidance in their latest reports. Realty Income is moving into data centers and private funds. Agree is cutting back on deals to protect its returns on U.S. retail property. For retirees, those two strategies shape how big each future check will be.

Realty Income Pays More Now While Agree Grows Faster

AFFO (adjusted funds from operations) measures the cash a REIT collects from rent after ongoing costs. It’s the fairest yardstick for whether a REIT can afford its dividend. Agree paid out about 69% of AFFO per share in the third quarter, which leaves a real buffer. Realty Income’s $3.258 forward dividend comes to roughly 73% of the midpoint of its 2026 AFFO guidance. That’s still covered, just with less room.

Realty Income has raised its dividend for 115 consecutive quarters, but each raise is now very small. Agree raises less often and by more each time.

Realty Income Expands Its Reach as Agree Narrows Its Focus

Realty Income agreed to a $6 billion hyperscale data center joint venture and will invest up to $1.4 billion for a 45% interest. Industrial properties made up about 65% of its second-quarter real estate investments. CEO Sumit Roy said, “Our expanding capital platform is reducing our reliance on public equity.” The catch is its watch list of financially weaker tenants, which accounts for rent in the high-5% area and tends toward home furnishings and casual dining.

Agree is taking the opposite approach. It spent about $360 million at a 7.3% cap rate and cut its 2026 investment target to about $1.6 billion. New purchases included a Walmart Supercenter, a BJ’s Wholesale location, and ground leases to Lowe’s and Home Depot. Joey Agree put the approach: “We are going to preserve our most precious asset. That is our balance sheet liquidity.” Year-to-date losses from bad credit and vacancies totaled just 9 basis points.

Data Center Returns and Agree’s Deal Pricing Come Next

Realty Income hasn’t disclosed the yields it expects once its data centers are fully leased. Until it does, I can’t judge whether the strategy adds to per-share income. I’ll be watching its third-quarter report for that detail.

Agree expects cap rates on its acquisitions to be materially higher in the fourth quarter and is guiding to mid-single-digit AFFO growth per share in 2027. If those higher-yielding deals arrive, the dividend should keep growing faster than Realty Income’s.

Why Agree Fits Retirees With a Long Runway

If I needed the most income today, Realty Income’s higher yield and Fitch ‘A’ rating would win. It fits a retiree in their late 70s who values a regular check now over future raises.

For someone retiring at 62, Agree’s profile fits better. A higher share of investment-grade tenants, cut debt, and a dividend that’s better covered and growing faster should do more to keep up with inflation over 25 years. The stock is down 3.2% year to date, so shares now trade below their January level. My view would change if Agree’s tenant losses rise or Realty Income’s data center yields turn out higher than I expect.

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