National Retail PropertiesNYSE: NNN

Cash in on the American Dream of property ownership with REITs. REITs provide reliable dividends and inflation protection from a diversified property base. We discuss two gems with over three decades of steady dividend growth for shareholders.

Blue-chip REITs rallied hard between early July and late October. However, they have recently pulled back. We discuss why, and we also share our top REIT pick of the moment.

NNN REIT reported stable Q3 earnings, but the stock fell over 10% due to tenant issues, which management downplayed on the earnings call. NNN is likely to lose more than 2% of ABR as two tenants move to cash accounting, making the replacement of these rents critically important. Today, we explore NNN's business model and why the company could be downplaying these emerging issues.

If you are looking for reliable income, these net lease REITs are each designed to let you sleep well at night.

NNN REIT has achieved a rare milestone.

ORLANDO, Fla. , Oct. 15, 2024 /PRNewswire/ -- The Board of Directors of NNN REIT, Inc. (NYSE: NNN), a real estate investment trust, today announced a quarterly dividend of 58 cents per share payable November 15, 2024 to shareholders of record as of October 31, 2024.

NNN REIT has a strong dividend track record with 35 consecutive years of increases and a stable yield over 4.6%, but limited growth prospects. Despite excellent fundamentals, including 99%+ occupancy and low volatility, NNN REIT's current valuation at $47/share is not attractive for new investments. The company's conservative strategy and diversified portfolio offer stability, but the potential for significant outperformance is limited, justifying a "Hold" rating.

We are changing our recommendation for NNN from a buy to a hold due to expected mean reversion in investment spreads. The current 117-basis points of investment spread will probably narrow as the sector adjusts to a new interest rate regime. The forward AFFO yield of 7.02% is below our hurdle rate of 7.54% for the sector.

NNN REIT offers a solid 4.8% dividend yield with a conservative 67% AFFO payout ratio and 35 years of consecutive dividend growth. NNN's strong balance sheet, diversified portfolio, and accretive acquisitions position it well to handle economic and interest rate uncertainties. Despite modest near-term FFO growth, potential rate cuts and steady rent escalations combined with acquisitions provide long-term growth prospects.