Chris Lange
5 min read
Quick Read
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ADC tops O with double the investment-grade tenant exposure, a 70% AFFO payout ratio, and nearly 6% projected per-share growth.
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Realty Income’s 5.43% yield and 670+ consecutive monthly dividends suit retirees prioritizing current income over faster dividend growth.
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Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now, and Realty Income didn’t make the cut. Enter your email to see the names that beat O. The report is free. Enter your email and see if any of your stocks made the cut.
Retirement investors weighing monthly income have two obvious candidates in the net lease space: Realty Income (NYSE:O) and Agree Realty (NYSE:ADC). Which one deserves the seat in a portfolio built to fund monthly bills?
Both operate the same model. A net lease REIT signs long contracts under which the tenant pays property taxes, insurance, and maintenance directly, leaving the landlord with a predictable rent check and minimal operating drag. That structure is what makes both names staples of income portfolios and what shifts the argument to details.
Dividend Safety on AFFO Coverage
Earnings payout ratios mislead for property owners because depreciation charges suppress reported net income. The right yardstick is adjusted funds from operations, which adds depreciation back and strips out non-cash items, giving a truer picture of cash available to pay the dividend.
Agree Realty reported quarterly AFFO per share of $1.14 against a payout ratio of 70% of AFFO per share. Realty Income’s quarterly AFFO per share was $1.09, against a monthly dividend rate of $0.2715. AFFO guidance sits at $4.44 to $4.45 for O versus $4.57 to $4.59 for ADC. ADC’s lower payout ratio provides more cushion against tenant hiccups and leaves more retained cash flow to fund acquisitions without diluting shareholders.
Winner: ADC.
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Tenant Quality and Concentration
Portfolio occupancy at ADC stands at 99.8% against O at 98.8%. The gap on credit quality is wider: investment-grade tenants supply over 73% of annualized base rents acquired at ADC and roughly two-thirds of the overall portfolio. Realty Income’s investment-grade client exposure sits at 34% of annualized rent.
