Covered, but thin — concentration is the story. A monthly restaurant-net-lease payer: the dividend was switched to monthly in August 2026 and raised to $0.1265 a share in the September declaration, and AFFO covers the new rate — but at about 84% of Q2 AFFO ($0.3795 a quarter against $0.45 of AFFO), the cushion is thinner than the House's other net-lease cards. Occupancy is 99.5% on a 6.6-year weighted-average lease term across 1,336 properties, rent collection ran 99.7% in Q2, and the $268 million Mission Pet Health portfolio cut Darden to about 41% of rent — still the single fact that decides this card. Leverage runs near the middle of the 5–6× target range. The yield is earned, not a trap: the dividend has grown every year for a decade and AFFO grew 1.4% in Q2. For a REIT, the House reads AFFO payout — never the EPS payout, which depreciation makes meaningless.
Key risk: Darden concentration — about 41% of rent still comes from one restaurant operator after the Mission deal, so a Darden-brand stumble, rising vacancies, or refinancing at higher rates squeezes the AFFO that covers the dividend.
Changes if: The AFFO payout pushes past ~90%, leverage breaks above the 6× top of the target range, or Darden's share of rent stops falling — or occupancy slips below ~99%. The cushion is the verdict.
- !AFFO coverage check: About 84% of AFFO paid out at the new $0.1265 monthly rate — $0.3795 a quarter against Q2 AFFO of $0.45 a share. First-half declared dividends of $0.7330 against first-half AFFO of $0.91 a share were about 81%. Covered, with a thinner cushion than O or NNN.
- !Yield check: ~6.9% is high but earned — backed by 99.5% occupancy, 99.7% rent collection and a 6.6-year weighted-average lease term across 1,336 properties in 48 states. The flag is concentration: Darden is still about 41% of rent, so this is not a diversified rent roll.
- !Leverage check: Run-rate net debt to adjusted EBITDAre of about 5.4× once the delayed-draw term loan is fully drawn and invested, inside the stated 5–6× range; Q2 fixed-charge coverage was 4.6×, and only a $50 million private note matures before 2027. Leverage is managed, not light.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.