Realty Income Corporation (NYSE:O) is the largest net lease real estate investment trust (REIT) globally, while Agree Realty Corporation (NYSE:ADC) is an emerging net lease REIT similar to Realty Income.

• Both focus on class A net lease properties occupied by investment-grade tenants.
• Both have strong investment-grade rated balance sheets.
• Both have a history of market outperformance.
• Both pay monthly dividends.
• Both are currently trading at historically low valuations and high dividend yields.

But which REIT is the better investment opportunity now?

Despite Realty Income’s superior past performance and consistent dividend growth for nearly 30 years, Agree Realty has generated higher recent returns and faster dividend growth.

If we consider the current size of the two REITs, Agree Realty’s smaller scale allows each new investment to have a more significant impact on its bottom line. Conversely, Realty Income’s larger size makes it more challenging to achieve the same growth rates without venturing into unfamiliar property sectors or geographies.

Furthermore, Agree Realty boasts advantages such as a higher percentage of investment-grade rated tenants, a larger portfolio of ground leases, a lower cost of equity, higher spreads on new investments, recent insider purchases, and a more favorable debt profile.

While Realty Income may offer a slightly cheaper valuation, the potential for higher total returns and faster dividend growth makes Agree Realty the preferred choice.

Bottom Line

In conclusion, both Realty Income and Agree Realty are promising REITs. However, due to Agree Realty’s potential for higher returns and faster dividend growth, it is the preferred investment option between the two.