O vs. VICI: Which Net Lease REIT Offers Safer Income in 2025?

Net lease REITs, which lease properties under agreements where tenants are responsible for property taxes, insurance and maintenance, appeal to income-focused investors due to their predictable cash flows. Two standout players in this space are Realty Income Corporation O and VICI Properties Inc. VICI. Both boast strong tenant relationships, investment-grade credit profiles and growing portfolios. Yet, their strategies, sector exposure and long-term reliability differ. 

In an environment fraught with tariff uncertainty, fiscal concerns and volatile markets, a reliable dividend stream continues to attract income-focused investors, and therefore, we examine which REIT offers safer income in 2025 by evaluating their portfolios, tenant bases, lease structures and financial strength.

The Case for Realty Income

Realty Income, widely known as “The Monthly Dividend Company,” has built a reputation for consistency, boasting 131 dividend hikes since its NYSE listing in 1994, 30 consecutive years of dividend growth and 111 straight quarterly increases, underscoring its resilience. This consistency is anchored by a globally diversified portfolio of 15,627 properties across 50 U.S. states and other international markets, leased to tenants in 91 different industries. A staggering 91% of its retail rent comes from non-discretionary, service-based tenants such as dollar stores, grocery chains and convenience stores — sectors that tend to hold up well in downturns.

The company’s strength lies in its scale and diversification. Its focus on single-tenant, freestanding properties under long-term net leases has resulted in a historical median occupancy rate of 98.2%. Realty Income has also expanded into high-growth areas like data centers and gaming, with recent transactions including Encore Boston Harbor and a partnership with Digital Realty. It expects full-year investments to total around $4 billion. With a global net lease addressable market estimated at $14 trillion, long-term growth potential remains compelling.

Financially, the REIT maintains $2.9 billion in liquidity, investment-grade ratings (A-/A3) and a well-laddered debt maturity profile. With a fixed charge coverage ratio of 4.7 and net debt/EBITDAre at 5.4, its balance sheet provides flexibility for future growth. 

However, retail exposure poses some risk from bankruptcies or trade disruptions. Additionally, interest rate sensitivity and elevated leverage ($27.6 billion in debt) remain key concerns in a high-rate environment. Its interest expenses were up 11.5% year over year to $268.4 million in the first quarter of 2025.

The Case for VICI Properties

VICI Properties is a leading experiential net lease REIT with a portfolio of 93 properties, including Caesars Palace, MGM Grand and the Venetian Resort in Las Vegas. It specializes in mission-critical assets in gaming, hospitality and entertainment, with properties located in 26 U.S. states and one Canadian province. These assets are under long-term triple-net leases with initial terms ranging from 15 to 32 years and extension options pushing average lease terms to more than 40 years.

What makes VICI especially compelling is its 100% occupancy rate and the mission-critical nature of its assets — tenants cannot easily relocate without incurring significant costs or regulatory hurdles. About 74% of rent roll comes from S&P 500 tenants, underscoring the creditworthiness and transparency of its income stream. Furthermore, 42% of leases are CPI-linked in 2025, set to rise to 90% by 2035, providing built-in inflation protection.

Despite concentration risks from major tenants like Caesars and MGM, VICI is actively diversifying beyond gaming. Acquisitions of experiential assets such as Bowlero and Chelsea Piers, alongside a $300 million strategic loan tied to One Beverly Hills, show its capability to deploy capital across stable, non-gaming segments. VICI also holds an investment-grade rating from all three major agencies and maintains $3.2 billion in liquidity with a targeted net leverage ratio of 5-5.5.

With a 7.4% CAGR in dividends since 2018 and a strong commitment to returning 75% of AFFO to shareholders, VICI offers a secure and growing income stream.

How Do Estimates Compare for Realty Income & VICI Properties?

The Zacks Consensus Estimate for Realty Income’s 2025 sales and funds from operations (FFO) per share implies year-over-year growth of 6.48% and 2.15%, respectively. Also, FFO per share estimates for 2025 and 2026 have been revised marginally northward over the past 30 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

For Realty Income:

The Zacks Consensus Estimate for VICI Properties’ 2025 sales and FFO per share implies year-over-year growth of 3.5% and 3.54%, 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 VICI Properties:

Price Performance and Valuation of O & VICI

Year to date, Realty Income shares have risen 8.1%, while VICI Properties stock has gained 11.2%. In comparison, the S&P 500 composite has risen 1.8% in the same time frame.

O is trading at a forward 12-month price-to-FFO, which is a commonly used multiple for valuing REITs, of 13.30X, ahead of its one-year median of 13.14X. Meanwhile, VICI is presently trading at a forward 12-month price-to-FFO of 13.63X, which is closer to its one-year median of 13.60X. O carries a Value Score of D, while VICI has a Value Score of C.

Conclusion

While Realty Income remains a stalwart in the net lease space with unmatched scale and reliability, VICI Properties offers a superior income safety profile in 2025. Its longer lease durations, mission-critical assets, inflation-protected rent escalators, and highly creditworthy tenant base give it the edge. Moreover, VICI’s strategic diversification beyond gaming and strategic capital deployment further reduces risk. For investors seeking a potentially growing income stream amid macroeconomic uncertainties, VICI Properties stands out as the better net lease REIT pick.

While VICI 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.

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This article originally published on Zacks Investment Research (zacks.com).

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