Sometimes the best income opportunities don't come from exciting stories or bold forecasts. They come from boring assets doing exactly what they are supposed to do.
That's how I feel about HomeCo Daily Needs REIT (ASX: HDN) right now.
At a share price of $1.36 at the time of writing, and FY26 distribution guidance of 8.6 cents per unit, this ASX real estate investment trust (REIT) is offering a forward dividend yield of over 6%, before any potential benefit from valuation upside.
For a REIT with defensive tenants, high occupancy, and growing earnings, that immediately gets my attention.
A portfolio built for everyday life
What I like most about HomeCo Daily Needs REIT is its practical portfolio.
The REIT focuses on convenience-based retail and services that people use regardless of economic conditions. This includes neighbourhood retail centres, large format retail, and health and service assets located in metropolitan growth corridors. These are properties anchored by tenants such as supermarkets, hardware stores, healthcare providers, and essential services.
Its three largest tenants include Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW), and Bunnings and Kmart owner Wesfarmers Ltd (ASX: WES).
This focus shows up clearly in the numbers. Occupancy has remained above 99% since its IPO, and cash rent collection has also stayed above 99%. That consistency matters a lot when you are relying on distributions to fund retirement or supplement income.
In a world where discretionary spending can swing wildly, HomeCo Daily Needs REIT's exposure to daily needs provides a level of earnings stability that many REITs simply don't have.
Solid earnings and growing distributions
The FY25 result confirmed why I'm comfortable with this REIT.
Funds from operations (FFO) came in at 8.8 cents per unit, in line with guidance, while distributions reached 8.5 cents per unit. More importantly, management has guided to FY26 FFO of 9 cents per unit and FY26 distributions of 8.6 cents per unit.
That may not sound dramatic, but modest growth combined with reliability is exactly what I want from an income REIT. I am far more interested in sustainability than in stretching for yield.
At today's share price, investors are being paid well to wait, with the prospect of gradual distribution growth layered on top.
Balance sheet strength and valuation upside
Another reason I would be comfortable owning this ASX REIT is its balance sheet.
Gearing sits around 35%, right in the middle of the target range. The trust has also actively managed its debt, recently refinancing $810 million of facilities out to 2028 at improved margins. Around 70% of debt is hedged until December 2026, which provides a degree of protection if rates remain higher for longer.
What really stood out to me recently was the valuation update from last month. As at December 2025, the trust recorded $219 million in gross valuation gains, driven by strong net operating income growth and slight cap rate tightening. This marked the fourth consecutive period of positive revaluations.
That tells me two things. First, the assets are performing operationally. Second, investor demand for high-quality daily needs property remains strong.
Why I think HomeCo Daily Needs REIT is a top buy for 2026
I'm not buying HomeCo Daily Needs REIT because I expect explosive growth. I'm buying it because it does the basics exceptionally well.
It owns assets that people rely on every day. It leases them to high-quality tenants. It maintains high occupancy. It manages its balance sheet conservatively. And it pays a reliable, growing distribution.
In an environment where income remains valuable and certainty is scarce, that combination is hard to ignore.
For investors seeking to position their portfolio for 2026 with a focus on income, stability, and prudent risk, I believe HomeCo Daily Needs REIT deserves serious consideration.
