Like High-Yield Realty Income Stock? You May Like Alpine Even More.

Realty Income (NYSE: O) is roughly 4 times the size of its next closest peer in the net lease niche of the real estate investment trust (REIT) sector. There are a lot of things to like about this industry giant.

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However, that doesn't mean there aren't interesting alternatives you might consider owning. One at the opposite extreme, size-wise, is Alpine Income Property Trust (NYSE: PINE), one of the smallest net lease REITs you can buy. Here's a look at both of these REITs.

What does Realty Income do?

As a net lease REIT, Realty Income owns buildings that it leases out to single tenants. Its tenants are responsible for most of the property-level operating costs for the buildings they occupy. Although any single property is high-risk because there's only one tenant, across a large portfolio the net lease approach is fairly low-risk. Realty Income owns a massive 15,400 properties.

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Roughly 73% of Realty Income's rents come from retail properties. Retail assets tend to be very similar in nature, so they are relatively easy to buy, sell, and re-lease as needed. The rest of Realty Income's portfolio is in industrial assets and a few unique investments, including vineyards and casinos. Also, Realty Income has investments in North America and across several European markets. This diversification is increasingly important because Realty Income's size necessitates a material amount of transaction volume to move the top and bottom lines.

What does Alpine do?

While Realty Income is a slow and steady giant, Alpine is a tiny upstart. This little REIT, with a very modest $250 million market cap, owns around 130 properties in 34 U.S. states. It is entirely focused on retail assets, which Realty Income estimates is a $1.5 trillion market in the United States. So there's more than enough room for this small fish to grow over time.

What's interesting here is the growth opportunity. Where Realty Income needs huge transaction volume, Alpine can make a few acquisitions a quarter and put up solid growth numbers. And, because it is so small and needs so few deals, Alpine can make one-off transactions that would be far too small for an industry giant to even bother with. To put that another way, Alpine can take advantage of unique opportunities that require a bit more digging to uncover.

For example, it recently bought restaurant properties in Florida following storm damage. The small, but successful, restaurant chain was working to reopen the locations when Alpine acquired the assets, so they appear to be a high risk investment. However, the operator has material insurance coverage and the rent is expected to be covered by that insurance until the locations do reopen. A deal like this would slip through the cracks for a giant like Realty Income, but Alpine can pounce and generate a high return because of the unique circumstances. Alpine is both big enough and small enough to make deals like this work.

Why you might like Alpine today

Everybody on Wall Street knows how well run Realty Income is. Comparatively few investors know about Alpine. That's why Alpine tends to trade at a notable valuation discount to Realty Income while also offering a higher dividend yield. Right now Alpine's dividend yield is a full percentage point higher than Realty Income's 5.8%. Alpine's roughly 6.8% yield is offering a nearly 20% boost to the income stream you would collect from Realty Income.

To be fair, Alpine comes with more risk given its small size. And it would probably be best to view it as a complement to a position in a larger peer like Realty Income. But if you are trying to maximize the passive income you are collecting from your portfolio, it might pay to consider adding this small, relatively cheap, and high-yielding net lease REIT. Alpine isn't perfect, but it has the potential to add material value to your portfolio if you can stomach owning a risker, but faster-growing, net lease REIT.

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