Updated 3/11/2025
NNN REIT, Inc. (NYSE: NNN) has built a strong reputation in the real estate investment trust (REIT) space, specializing in triple-net leases. With a portfolio of over 3,500 properties spread across 49 states, the company focuses on single-tenant retail properties leased to well-established businesses. This strategy gives it a level of stability that many income investors look for in a dividend stock.
At its current price of $42.89, NNN is delivering a solid dividend yield north of 5.4%. For investors looking for consistent income, that’s an appealing number. But is the payout sustainable, and where is the company headed? Let’s dig in.
📌 Key Dividend Metrics
🟢 Dividend Yield: 5.41% – a strong income stream compared to the broader market
🟢 Annual Dividend Payout: $2.32 per share
🟢 5-Year Average Dividend Yield: 5.19% – historically stable
🟢 Payout Ratio: 106.51% – worth keeping an eye on
🟢 Dividend Growth Streak: 34 consecutive years – impressive consistency
🟢 Ex-Dividend Date: January 31, 2025
🟢 Next Payment Date: February 14, 2025
Dividend Overview
NNN has established itself as a reliable dividend-paying REIT. With 34 consecutive years of dividend increases, it’s earned its reputation as a steady income generator. The current dividend yield of 5.41% makes it an attractive choice for investors focused on passive income, particularly in a market where high yields can be hard to find.
One concern, however, is the payout ratio, which sits at over 106%. This means the company is paying out more in dividends than it earns in net income. While this isn’t necessarily a red flag for a REIT—since these companies must distribute most of their taxable income—the high ratio suggests that NNN might need to rely on external funding, such as debt or asset sales, to sustain its current dividend growth rate.
That being said, NNN has been through its fair share of economic cycles, including recessions and periods of rising interest rates, and it has consistently kept its dividend intact.
Dividend Growth and Safety
One of the biggest reasons investors turn to NNN is its long track record of growing dividends. The company has raised its payout for over three decades, which speaks to the stability of its business model.
✔ 5-Year Dividend Growth Rate: Around 2.5% annually
✔ Payout Ratio: Over 100% – something to monitor
✔ Dividend Safety Rating: Moderate – history is on its side, but cash flow is key
While the high payout ratio is worth keeping an eye on, NNN’s consistent rental income from long-term leases makes it more resilient than many other dividend-paying stocks. The company’s triple-net lease structure shifts expenses like taxes, insurance, and maintenance to tenants, helping maintain predictable cash flow.
Chart Analysis
The chart for NNN REIT, Inc. is showing some interesting technical movements, particularly in the context of recent price action and moving averages. There’s a clear shift in momentum that dividend investors and long-term holders should take note of.
Moving Averages and Trend Direction
The 50-day moving average is currently below the 200-day moving average, which signals that the stock has been in a longer-term downtrend. However, the price has recently been climbing back toward these key levels, suggesting the possibility of a trend reversal. The 200-day moving average is acting as a resistance level, and if NNN can break above it, that would be a strong bullish signal.
The 50-day moving average is starting to curve upward, meaning short-term momentum is picking up. A cross above the 200-day moving average would confirm a bullish shift, but for now, the stock is still in recovery mode.
Volume and Market Participation
Looking at the volume, there has been an increase in trading activity over the past few weeks. This suggests that more investors are stepping in as the stock rebounds from its recent lows. Volume spikes are often a sign of accumulation, which means buyers are becoming more interested at these levels.
During the downtrend, volume was relatively low, but recent bars show a mix of buying and selling pressure. This could indicate that investors are cautiously re-entering, though a clear breakout above resistance would need strong volume support.
Relative Strength Index (RSI) and Momentum
The RSI indicator is showing a steady rise from previous oversold conditions. A while back, the RSI dipped well below 30, indicating that the stock was oversold. Since then, it has been climbing toward the neutral 50 level. If RSI pushes above 60, it would suggest that momentum is back in favor of the bulls.
For now, the RSI tells us that selling pressure has eased and buyers are coming in, but the stock is not yet in overbought territory. That means there’s still room for potential upside before a pullback becomes likely.
Price Action and Support Levels
The recent price movement shows a series of higher lows, which is typically a good sign that a base is forming. The stock seems to have found strong support near the $38 range, where buyers stepped in aggressively. The next resistance point to watch is around $44 to $45, where the 200-day moving average could act as a barrier.
The last few candlesticks show small upper wicks, indicating some selling pressure at higher levels. However, the lower wicks are not very long, meaning buyers are still active and absorbing any dips. If the price can stay above $42 and push past $44, there’s a chance for further upside.
Overall Trend Interpretation
Right now, NNN is in a recovery phase, coming off a period of weakness but not yet in a confirmed uptrend. The key levels to watch are the 200-day moving average and the recent highs. If volume continues to build and price action remains strong, this could be the early stage of a new trend. However, any rejection at resistance could mean more consolidation before the next move.
Analyst Ratings
NNN REIT, Inc. has recently experienced a series of analyst upgrades and downgrades, reflecting varied perspectives on its performance and future prospects. The consensus among analysts is a “Hold” rating, with a 12-month average price target of approximately $44.55, indicating a modest potential upside from current levels.
Upgrades:
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Morgan Stanley: On January 15, 2025, Morgan Stanley upgraded NNN REIT from “Equalweight” to “Overweight,” setting a price target of $48. This upgrade was based on the firm’s assessment of NNN’s robust property portfolio and resilient cash flows, which they believe position the company well for future growth.
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Barclays: Initiating coverage on December 17, 2024, Barclays assigned an “Overweight” rating with a $48 price target. The firm highlighted NNN’s strategic focus on high-quality retail properties and long-term leases as key factors supporting its positive outlook.
Downgrades:
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Janney Montgomery Scott: On January 15, 2025, Janney Montgomery Scott downgraded NNN REIT from “Buy” to “Neutral,” reducing the price target from $49 to $43. The downgrade was attributed to concerns over the company’s valuation metrics and potential headwinds in the retail real estate sector.
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Jefferies: On January 2, 2025, Jefferies downgraded NNN REIT from “Buy” to “Hold,” adjusting the price target from $52 to $43. The firm cited challenges in the retail environment and a cautious stance on the REIT’s near-term growth prospects as reasons for the downgrade.
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BNP Paribas Exane: On November 4, 2024, BNP Paribas Exane downgraded NNN REIT to “Underperform,” assigning a price target of $44. The downgrade reflected concerns about the sustainability of rental income streams amid changing consumer behaviors affecting retail tenants.
These mixed analyst opinions underscore the importance of considering both the company’s strengths and the broader market dynamics when evaluating NNN REIT as an investment.
Earnings Report Summary
NNN REIT, Inc. wrapped up 2024 with a solid performance, showing steady growth in revenue and earnings while maintaining a strong real estate portfolio. The latest earnings report highlights the company’s ability to navigate market conditions while continuing to reward shareholders with consistent dividends.
Financial Performance
Revenue for the fourth quarter came in at $218.5 million, up slightly from the same period last year. Net income followed a similar trend, landing at $97.9 million for the quarter, translating to earnings per share of $0.52. For the full year, the company reported funds from operations (FFO) at $3.32 per share, keeping in line with expectations.
One of the more encouraging aspects of the report was the adjusted funds from operations (AFFO) at $3.35 per share. This number is particularly important for income investors since it reflects the company’s ability to sustain its dividend payments.
Real Estate Portfolio and Occupancy
NNN continued to expand its portfolio in 2024, investing over $565 million in new properties. These acquisitions added 75 properties to its already extensive collection, bringing the total number of properties under management to 3,568 across 49 states. The company’s occupancy rate remained strong at 98.5%, showing that demand for its leased properties remains steady.
Maintaining high occupancy is key for any REIT, and NNN’s long-term lease strategy ensures a predictable revenue stream. With tenants locked into long-term agreements, the company can avoid frequent vacancies and keep cash flow steady.
For dividend investors, NNN remains a dependable choice. The company increased its annual dividend for the 35th consecutive year, reinforcing its commitment to income-focused investors. At the end of 2024, the dividend yield stood at around 5.2%, making it an attractive option for those seeking steady payouts.
Looking at the bigger picture, NNN has delivered an impressive total shareholder return over the past 30 years, averaging around 11.1% annually. That kind of consistency is what makes it a favorite among long-term investors.
Looking Ahead to 2025
Management has set its sights on another year of steady performance, projecting core FFO between $3.33 and $3.38 per share. The company also plans to continue expanding, with $500 million to $600 million earmarked for new property acquisitions.
With strong fundamentals, steady dividend growth, and a disciplined approach to expansion, NNN remains well-positioned for the year ahead.
Financial Health and Stability
NNN’s business model provides a high level of stability, but its financials tell a more detailed story. The company’s profit margin sits at 45.65%, while its operating margin is nearly 62%, which are solid figures for a REIT.
Some key numbers to consider:
🔹 Total Debt: $4.37 billion – higher than ideal but common for REITs
🔹 Debt-to-Equity Ratio: 100.26% – a sign that leverage is being used heavily
🔹 Cash Reserves: Just $8.73 million – fairly low liquidity
🔹 Return on Assets (ROA): 3.87% – in line with industry averages
🔹 Return on Equity (ROE): 9.32% – decent for a REIT
Debt is an important factor when evaluating a REIT, and NNN carries a fairly high amount. However, this isn’t necessarily a red flag, as real estate businesses often use debt strategically to finance new property acquisitions. Still, the low cash reserves mean that NNN will need to consistently generate rental income and have access to capital markets to maintain operations and dividend payouts.
Valuation and Stock Performance
At a price-to-earnings (P/E) ratio of 19.95, NNN is trading at a reasonable valuation compared to its historical range. However, the stock has had a bumpy ride over the past year. It’s currently down from its 52-week high of $49.57, hovering around 13.5% below its 200-day moving average of $43.72.
Key valuation insights:
✔ Price-to-Book Ratio: 1.84 – suggests the stock is fairly valued
✔ Price-to-Sales Ratio: 9.08 – a bit high, but normal for a high-quality REIT
✔ Enterprise Value/EBITDA: 14.94 – reasonable for the sector
Like most REITs, NNN has faced pressure from rising interest rates, which have made dividend stocks less attractive compared to fixed-income investments. If rates remain high, REIT valuations could continue to see some headwinds.
Risks and Considerations
While NNN is a strong dividend stock, it isn’t without risks. Here are a few things to consider:
1️⃣ Interest Rate Sensitivity – Higher rates can increase borrowing costs for REITs and make dividend yields less appealing compared to bonds.
2️⃣ High Payout Ratio – At over 106%, this could limit future dividend increases if earnings don’t keep up.
3️⃣ Retail Tenant Exposure – While NNN has a diversified portfolio, its retail-heavy focus means it is somewhat exposed to consumer spending trends.
4️⃣ Debt Load – With a debt-to-equity ratio above 100%, the company relies on favorable financing conditions to fund operations and acquisitions.
Final Thoughts
NNN REIT has a lot to offer dividend investors, particularly those looking for a steady income stream and a history of reliable payouts. Its 34-year streak of dividend growth is a testament to the strength of its business model.
However, with a payout ratio exceeding 100%, it’s important to watch how the company manages cash flow and debt moving forward. While the dividend appears safe for now, future growth could be slower if earnings don’t keep pace.
For long-term investors, NNN is a solid REIT with a strong track record, but as with any investment, it’s important to keep an eye on the financials and overall market conditions to ensure the company can continue delivering on its dividend promise.
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