Retail REITs have been a picture of resilience in a high-rate environment, with property-level fundamentals proving stronger than many expected. Two of the sector’s most established names — Realty Income Corporation (O Quick QuoteO - Free Report) and Federal Realty Investment Trust (FRT Quick QuoteFRT - Free Report) — stand out for their scale, stability and long histories of dividend growth. 

Both companies enjoy solid tenant bases anchored by necessity-driven retailers and have maintained enviable occupancy levels through economic cycles. Yet, their approaches differ: Realty Income leans heavily on global diversification and scale within the triple-net lease model, while Federal Realty focuses on high-quality, open-air shopping centers and mixed-use destinations in affluent U.S. markets. 

As investors weigh defensive income against long-term growth, the comparison between these two becomes particularly relevant. Let’s examine both these retail REITs to see which one offers a stronger long-term growth trajectory.

The Case for Realty Income

Realty Income continues to live up to its moniker, The Monthly Dividend Company, delivering a unique blend of income reliability and global diversification. Its third-quarter 2025 results highlight operational strength, with rental revenues of $1.39 billion, up 9% year over year, and occupancy steady at 98.7% across more than 15,500 properties in 92 industries.
 
The REIT invested $1.4 billion during the quarter at a 7.7% weighted-average initial cash yield, with 72% of that directed toward Europe, showcasing its ability to source deals globally where spreads are most attractive. Management has raised 2025 investment guidance to $5.5 billion, signaling confidence in a robust pipeline of opportunities.

The portfolio’s strength lies in its scale, tenant diversity and defensive focus on essential retail categories, like grocery, convenience and drugstores, which perform steadily through cycles. Realty Income’s AI-driven predictive analytics tool, honed over six years, optimizes asset management and leasing, enhancing operational efficiency and capital recycling. 
The company’s disciplined balance sheet management is also noteworthy, with net debt to EBITDA at 5.4X, a fixed charge coverage ratio of 4.6 and $3.5 billion in liquidity, positioning it to seize opportunities even amid macro uncertainty.

Nevertheless, certain headwinds remain. Growth in AFFO may stay subdued as tighter investment spreads and broader economic uncertainty weigh on expansion. The company’s retail exposure also presents some vulnerability to tenant bankruptcies or trade-related disruptions. Realty Income expects about 75 basis points of potential credit loss in 2025, partly tied to credit risks among tenants acquired through past M&A deals. Yet, these are small trade-offs for a platform that has declared a 132nd common stock monthly dividend increase. For investors seeking reliability and steady total return potential, Realty Income remains the REIT industry’s benchmark for consistency.

The Case for Federal Realty

Federal Realty Investment Trust distinguishes itself through focus, location quality and steady operational excellence. The company’s third-quarter 2025 results showcased its strength. FFO per share of $1.77 topped expectations, and management raised full-year guidance to $7.05-$7.11, reflecting resilient tenant demand. Comparable property operating income rose 4.4%, and the leased rate reached 95.7%, which is a testament to both execution and asset quality. The quarter’s highlight was record leasing volume of 727,029 square feet at an impressive 28% rent growth.

Federal Realty’s model emphasizes dominant, necessity-anchored retail centers in affluent markets like Bethesda, Santana Row, and Pike & Rose, locations where strong demographics and limited competition support long-term rent growth. 

Recent acquisitions, such as Annapolis Town Center, a premier open-air retail center in Annapolis, MD and Town Center Crossing and Town Center Plaza, two dominant open-air retail centers in Leawood, KS, fit squarely within this strategy. The company’s ongoing residential projects in Hoboken, NJ; Bala Cynwyd, PA; and Santana Row, CA, illustrate how mixed-use intensification enhances value and diversifies income. Management maintains a disciplined balance sheet, with fixed charge coverage at 3.9X, and $1.3 billion in liquidity, giving ample flexibility to fund growth.

However, redevelopment projects require capital and time before generating cash flow, and concentration in high-income U.S. markets means less diversification than Realty Income’s global footprint. Still, these traits reflect strategic choice, not vulnerability. FRT’s localized approach enables stronger control, higher rents and deeper community integration.

Ultimately, Federal Realty blends the reliability of a blue-chip REIT with visible growth potential. Record leasing, embedded rent escalations and a robust redevelopment pipeline all point to sustainable earnings momentum into 2026 and beyond.

How Do Estimates Compare for Realty Income & Federal Realty?

The Zacks Consensus Estimate for Realty Income’s 2025 sales and funds from operations (FFO) per share implies year-over-year growth of 8.08% and 1.91%, respectively. The estimates for both 2025 and 2026 FFO per share have been revised northward over the past 30 days.

For Realty Income:

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Federal Realty’s 2025 sales and FFO per share calls for year-over-year growth of 5.21% and 6.65%, respectively. What is also encouraging is that FFO per share estimates for 2025 and 2026 have been trending northward over the past 60 days.

For Federal Realty:

Image Source: Zacks Investment Research

Price Performance and Valuation of O & FRT

In the past three months, Realty Income shares have declined 3.2%, while Federal Realty stock has gained 4%. In comparison, the Zacks REIT and Equity Trust - Retail industry has risen 2.1% in the same time frame.

Image Source: Zacks Investment Research

O is trading at a forward 12-month price-to-FFO, which is a commonly used multiple for valuing REITs, of 12.89X, which is below its three-year median. 

Meanwhile, FRT is presently trading at a forward 12-month price-to-FFO of 13.24X, which is below its three-year median of 14.64X. While FRT carries a Value Score of C, O has a Value Score of D.

Image Source: Zacks Investment Research

Conclusion: FRT Has the Edge

Both Realty Income and Federal Realty demonstrate excellence. Realty Income’s vast, diversified platform continues to deliver dependable monthly dividends and stability few peers can match. Meanwhile, Federal Realty leverages premium assets and record leasing momentum to unlock higher growth. While O remains a fortress for conservative income seekers, FRT’s operational intensity, rent spreads and mixed-use edge provide more torque for total-return investors. 

As retail real estate evolves toward experience and density, Federal Realty emerges as the more attractive buy right now, combining safety, growth and long-term compounding power. Estimate revisions and valuation also suggest that FRT stands out as the better retail REIT pick currently.

While FRT carries a Zacks Rank #2 (Buy), O has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.