Tire Shops, Convenience Stores and Warehouses Pay Rent to These 3 REITs, and $120,000 Yields $6,889 a Year
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.
Many of the tire shops on the corner, the gas station stores off the highway, and the warehouses at the edge of town rent their buildings from publicly traded landlords. Three of those landlords are net lease real estate investment trusts (REITs). Investing $40,000 in each, or $120,000 total, would return about $6,889 a year in dividend income at the Nov. 10, 2026 closing prices.
In a net lease, the tenant pays the property taxes, insurance, and maintenance on top of the rent. The landlord collects the rent check and spends very little on the building. These leases often run 10 years or longer and include rent increases. REITs must pay out 90% of their taxable income to shareholders, which is why the yields in this group are high.
We’ve covered net lease REITs several times recently, including what falling Treasury yields mean for the group. This piece sticks to the tenants and the income math. Here’s what a $40,000 investment across all three high-yield names would return each year, from lowest to highest yield.
Realty Income
- Stock #3: Realty Income (NYSE:O)
- Forward Yield: 5.47% (close of $59.54)
- Shares for $40,000: 671.8
- Annual Passive Income: ~$2,189
Realty Income owns or holds interests in 15,536 properties leased to 1,842 clients. Many of them are convenience stores, dollar stores, and drug stores, and the portfolio also includes industrial buildings and a growing number of data centers. Occupancy was 98.8% at the end of the third quarter.
The company pays monthly and has declared 676 consecutive monthly dividends. Its third-quarter report announced the 116th straight quarterly increase. AFFO (adjusted funds from operations) is the cash-flow measure REITs use in place of earnings. The $3.258 annual payout uses about 73% of 2026 AFFO guidance of $4.45 to $4.46 per share. The main risk is slower growth. At Realty Income’s size, it takes a $10.0 billion investment target to keep growing, and same-store rental revenue rose just 1.1%.
W. P. Carey
- Stock #2: W. P. Carey (NYSE:WPC)
- Forward Yield: 5.81% (close of $65.37)
- Shares for $40,000: 611.9
- Annual Passive Income: ~$2,325
W. P. Carey is the warehouse landlord in this group. Industrial buildings make up 39% of its annualized base rent, warehouses 25%, and retail 22%. Recent deals include a Sunoco property in Arkansas, Dollar General stores, and a build-to-suit project for TI Automotive in Canada. About half of its rent is tied to inflation-linked increases.
The company cut its dividend after spinning off its office properties into Net Lease Office Properties on November 1, 2023. The company says the lower dividend shows its plan to exit office, which it announced on September 21, 2023. The quarterly payment dropped to $0.86 in December 2023. It has risen every quarter since then and is now at $0.95. The $3.80 annual rate uses about 72% of the midpoint of 2026 AFFO guidance. Interest rates are the main risk. W. P. Carey recently refinanced 4.250% notes with new notes paying 5.200%.
NNN REIT
- Stock #1: NNN REIT (NYSE:NNN)
- Forward Yield: 5.94% (close of $41.76)
- Shares for $40,000: 957.9
- Annual Passive Income: ~$2,375
NNN REIT is the landlord for tire shops and convenience stores. Automotive service tenants such as Mavis Tire Express Services and Mister Car Wash account for 19.2% of its annualized base rent. Convenience stores, including 7-Eleven, add 15.5%. Its 3,817 properties are 99.2% occupied.
NNN has raised its annual dividend for 37 consecutive years, and this year it lifted the quarterly payout to $0.62. Its AFFO payout ratio of 68% is the lowest of the three. The main risk is a tenant going bankrupt. A chain in bankruptcy can walk away from its leases, and Texas alone supplies 17.6% of NNN’s rent.
How Taxes Affect REIT Income
REIT dividends usually don’t count as qualified dividends, so most of the payout is taxed as ordinary income, which IRS Publication 550 says covers ordinary dividends. Federal law lets individuals deduct 20% of their qualified REIT dividends under the qualified business income deduction, which lowers the effective tax rate.
$6,889 a Year From Three Landlords
| Name | Yield | Annual Dividend Income |
|---|---|---|
| NNN REIT | 5.94% | $2,375 |
| W. P. Carey | 5.81% | $2,325 |
| Realty Income | 5.47% | $2,189 |
| Total | 5.74% | $6,889 |
Together, these three holdings produce $6,889 of passive income per year on a $120,000 investment, a blended yield of 5.74%. NNN REIT contributes $2,375, W. P. Carey adds $2,325, and Realty Income brings in $2,189.
Occupancy and rent collection are the numbers to watch in each quarterly report. If tenants stop paying, the cash that funds these dividends shrinks, and none of these payouts is guaranteed. When tenants keep paying, rent from tire shops, gas stations, and warehouses comes in on schedule, and that regular cash is what these three REITs pass along to shareholders.
Contact [email protected] for any questions or corrections.
David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
