Agree Realty (NYSE: ADC) is a fairly attractive net-lease real estate investment trust (REIT). But it isn't the only net-lease REIT you can buy, nor is it the biggest. If you are a conservative investor focused on dividend consistency, you might be better off buying net-lease giant Realty Income (NYSE: O) instead. Here's a look at why.

Agree has a great record, but not a long one

Agree Realty has increased its dividend annually for the last nine years. The compound annual dividend growth rate over the past decade is around 6% or so. Those aren't bad stats in an industry that's known for tortoise-like performance. Digging into the story a bit, over the past 10 years, the REIT has broadened its portfolio from 109 retail properties in 2013 to 2,135 in 2023. So the growth story of the past decade is really about portfolio expansion.

But it is important to understand the change that has taken place. Agree went from being a pipsqueak to a being major player in the net-lease industry (net leases require tenants to pay most property-level operating expenses). In fact, it was so small when it came public that the bankruptcy of a single tenant was enough to force a dividend cut in 2011. It is a very different company today and no single tenant or property vacancy would have a similar impact. And there's likely ample growth ahead of the REIT. After all, the largest player in the net-lease space, Realty Income, owns over 15,400 properties.

Slow and steady isn't so bad

That said, for more conservative investors, it might make sense to buy a company like Realty Income, because it has the scale to compete at a different level. For example, Realty Income's consecutive streak of annual dividend increases is up to 30 years. Sure, dividend growth over that span has been around 4% a year, which is slower than the historical dividend growth at Agree. But if you are retired and focused on creating a reliable income stream, Realty Income's dividend record is far superior.

Then there's the benefits of scale that Realty Income has. Being so large, it has easier access to capital markets, which lowers its cost of capital. It also has exposure to Europe, where it can sometimes sell bonds with advantaged yields. That's not to suggest that Agree is somehow capital-constrained, which doesn't appear to be true, only that industry giant Realty Income is better positioned on the capital-raising front. That allows it to be aggressive when it pursues acquisitions.

Realty Income's size also allows it to buy properties, or portfolios of properties, that Agree could never consider because of its small size. That includes Realty Income acting as an industry consolidator, buying up smaller companies like Agree with little to no difficulty. Although Agree's ability to cherry-pick transactions has clear benefits, Realty Income's size opens up a whole new level of investment opportunity. A good example of this comes from Europe, where the net-lease approach is fairly new. Companies are usually looking to sell entire portfolios there, not one-off properties. Big REITs like Realty Income have a leg up on smaller players in the region.

Does yield and history trump growth for you?

At the end of the day, choosing between Agree Realty and Realty Income is about nuances, not shocking variations. For example, the faster-growing Agree's dividend yield is 4.9%, while Realty Income's yield is 5.9%. Sure, Realty Income's yield is notably higher, but they are both high-yield stocks. And the lower yield from Agree is a function of its faster dividend growth and future growth prospects. That will be attractive to lot of investors, but probably not all investors. Realty Income's role as the industry leader and its impressive long-term track record will probably make it a better choice for conservative investors who are trying to maximize current income.

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Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.

Forget Agree Realty, Buy This Magnificent REIT Stock Instead was originally published by The Motley Fool