As real estate investment trusts (REITs), Retail Opportunity Investments Corp. (NASDAQ:ROIC) and Realty Income (NYSE:O) have to distribute 90% of their earnings to investors -- a nice boon for income investors. Both own retail properties stuffed with tenants that people visit regularly (most notably Safeway on ROIC's side and Walgreens on Realty Income's side), meaning that demand for the properties they lease is steady or growing. And let's be clear: Both are great dividend stocks with plenty of long-term potential for anyone who likes their businesses cash-rich.

But in a duel between the two, there can only be one winner. Let's start with how and where they invest.

Business growth
Realty Income Group isn't a pure-play retail investor -- 79% of its portfolio is retail, with the majority of the remainder taken up by industrial properties. Realty Income focuses on long-term, triple-net leases, where the tenant pays all expenses -- including insurance and taxes -- on their space while also cutting the owner a regular rent check. Management's primary focus is on properties that serve, to quote CEO John Case, "service-oriented nondiscretionary low-price-point businesses" -- restaurants, pharmacies, gyms, and the like. (This and other quotes come from S&P Global Market Intelligence.) The idea here is to find industries that aren't being seriously disrupted by the Internet and e-commerce, and sign those tenants to long-term leases.

ROIC focuses on a subset of these businesses, with a clear preference for grocery store-anchored shopping centers in affluent markets on the West Coast. While that may seem very nichey compared with the more broadly diversified Realty Income Group (mostly because it is), it's a great niche to occupy. ROIC has a number of properties where rents are well below market value. Escalating that rent leads some tenants to choose to move out, which means ROIC can replace them with higher-quality tenants. Name-dropping those new tenants is helping ROIC recruit more and more quality tenants for the same shopping centers. Think about it this way: If you're Whole Foods, you'd prefer to be next door to a Lululemon instead of a Sports Authority.

This virtuous cycle of higher rent that leads to better tenants (and ROIC has 97.2% of its portfolio leased, so it's clearly not causing tons of vacancy), which leads to more quality tenants (and higher rent), which leads to more customers who choose ROIC shopping centers because more of their favorite brands are there, is a powerful opportunity for the company to capitalize on. And given the company's smaller footprint, I think it has more growth opportunities ahead than Realty Income Group.

Advantage: Realty Opportunity Investments Corp.

Business stability
If you're an income investor, stability is key -- you don't want anything messing with that cash flow. ROIC does reasonably well here, given that the company has only operated as a REIT for the past six years. ROIC isn't terribly well diversified geographically, as it operates only in California, Washington, and Oregon.

Realty Income Group, by contrast, practically defines broad geographic diversification, owning properties in 49 states and Puerto Rico. It generates 44% of its rent from investment-grade tenants (big names such as Walgreens, which is also its No. 1 tenant at 6.9% of rental revenue), and with an occupancy rate of 98.4%, Realty Income is clearly in a great spot. For me, the most important component is longevity -- Realty Income Group has been through a number of downturns and recessions since its NYSE listing in 1994. Put simply, this is a company that has grown through thick and thin for a very long time -- and that makes it the more stable investment.

Advantage: Realty Income Group.

The almighty dividend
Realty Income Group is a dividend aristocrat, one of those rare companies that has increased its dividend for at least 25 years consecutively. The dividend is well covered by funds from operations, or FFO -- a non-GAAP supplementary measure of profitability REITs use. A coverage ratio under 85% should be considered reasonably safe, and it has an 83% coverage ratio using 2015 adjusted FFO. The dividend has grown at just below a 5% compound annual growth rate for the past 22 years.

ROIC only instituted a dividend in 2010, but it is maintaining good conservative coverage of it -- according to the midpoint of 2016 FFO guidance, ROIC will pay out around 71% of FFO in dividends this year. While ROIC has also grown its dividend each year, longevity once again plays into Realty Income Group's hand.

Advantage: Realty Income Group.

In the end, it's pretty clear
ROIC is a great company, and I believe that it has a bright future in its niche. I'll even go so far as to say that it may have better growth opportunities than Realty Income Group, since it's so much smaller and earlier in its business cycle. But balance that against Realty Income's long history of growth, dividends, and strong management, and the choice is clear: Realty Income Group is the better dividend stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.