Dollar General offers the widest bond-to-NNN spread in the entire IG 180 tenant database. The same BBB / Baa3 corporate credit that backs a Dollar General bond coupon also backs the lease payment on a Dollar General NNN property, yet the NNN investor earns 145 to 245 basis points more yield before even accounting for tax advantages that are completely unavailable to bondholders.
This page compares the two instruments side by side so investors evaluating Dollar General credit can see exactly what each dollar buys. For the full methodology and 21-company comparison, see the Bond-to-NNN Spread Anchor Page. For the complete Dollar General NNN tenant analysis, see the Dollar General Credit Rating and NNN Cap Rate page.
Dollar General Credit Profile
| Metric | Details |
|---|---|
| S&P Rating / Outlook | BBB / Stable (affirmed September 2025) |
| Moody’s Rating / Outlook | Baa3 / Stable (downgraded from Baa2, March 2025) |
| Investment Grade Status | Investment Grade (floor of IG at Moody’s) |
| Ticker | NYSE: DG |
| US Store Count | 20,000+ |
| Annual Revenue | ~$40 billion (FY2025) |
The Spread: Dollar General Bonds vs. NNN
| Metric | DG Corporate Bond | DG NNN Property |
|---|---|---|
| Yield / Cap Rate | ~5.30% (5-10yr senior unsecured) | 6.75% to 7.75% |
| Nominal Spread vs. Bond | Baseline | +145 to +245 bps |
| Minimum Investment | ~$1,000 (via broker) | ~$1,200,000 to $2,500,000 |
| Liquidity | Sells in seconds on secondary market | 60 to 90 day sale cycle |
| Income Taxation | Ordinary income (37% federal + state + NIIT) | Sheltered by depreciation |
| 1031 Exchange Eligible | No | Yes |
| Depreciation Deduction | None | 39-year straight line + cost segregation |
| Appreciation Potential | Returns par at maturity | Real estate appreciates over time |
| Rent / Coupon Growth | Fixed coupon (no inflation protection) | Contractual escalations (typically 10% every 5 years) |
| Leverage Available | Typically unlevered | 60% to 75% LTV financing available |
Bond yield is approximate, derived from Dollar General’s rating-tier position relative to the ICE BofA BBB US Corporate Index (~5.29% as of March 19, 2026, per FRED). NNN cap rates reflect market transaction benchmarks from InvestmentGrade.com’s IG 180 database. Both data sets fluctuate daily. This is not investment advice.
After-Tax Comparison: $1,000,000 Invested in Dollar General
| Metric | DG Bond | DG NNN (Unlevered) | DG NNN (Levered 65% LTV) |
|---|---|---|---|
| Investment / Equity | $1,000,000 | $1,000,000 | $1,000,000 equity ($2,857,143 property) |
| Annual Income / NOI | $53,000 | $72,500 | $207,143 NOI |
| Annual Debt Service | N/A | N/A | ($143,580) at 6.0%, 25-yr amortization |
| Pre-Tax Cash Flow | $53,000 | $72,500 | $63,563 |
| Tax at ~45.8% combined rate | ($24,274) | Sheltered by depreciation | Sheltered by depreciation |
| After-Tax Cash Flow | $28,726 | ~$72,500 | ~$63,563 |
| After-Tax Return on Equity | 2.87% | ~7.25% | ~6.36% |
| Equity Buildup (amortization) | None | None | ~$30,000 / year |
| 1031 Exchange at Exit | No (capital gains taxed) | Yes (gains deferred) | Yes (gains deferred) |
Why Dollar General Has the Widest Spread
Dollar General’s bond-to-NNN spread is the widest in the IG 180 for a specific reason: the NNN market prices in location risk that the bond market does not differentiate. Dollar General’s 20,000+ stores are concentrated in rural and secondary markets with populations under 20,000. These locations are effective retail operations (Dollar General is often the only retailer serving these communities), but the NNN real estate market demands higher cap rates to compensate for lower population density, limited re-tenanting alternatives, and thinner resale liquidity compared to suburban or metro locations.
The bond market does not make this distinction. A Dollar General bond is backed by the entire $40 billion enterprise regardless of where individual stores are located. Bond investors see BBB / Baa3 credit and price accordingly. NNN investors see a single store in a town of 8,000 people and demand a premium. That geographic mismatch between how the bond market and the NNN market evaluate the same credit is what creates the 145 to 245 basis point spread.
For investors who understand this dynamic, Dollar General NNN represents the most efficient way to harvest excess yield on investment grade credit in the entire net lease market.
Key Underwriting Considerations
Not every Dollar General NNN property is equal. The spread varies within the tenant based on several factors. Lease term remaining is the most significant driver: new construction with 15 years remaining commands tighter cap rates (6.75% to 7.00%) while properties with 5 to 7 years left price wider (7.50% to 8.00%+). Rent level relative to store sales matters because a lease with rent above 8% to 10% of store revenue carries renewal risk. Building condition and year of construction affect re-tenanting potential if Dollar General were to vacate. And market demographics (population trend, median household income, distance to competing retailers) influence both the store’s operational viability and the property’s residual value.
The strongest Dollar General NNN acquisitions combine long remaining lease term, rent well below the store’s revenue, newer construction, and a location in a market with stable or growing population. These properties deliver the full spread advantage with the lowest risk profile.
As of Q1 2026, the nominal spread is approximately 145 to 245 basis points. Dollar General bonds yield roughly 5.30% while NNN properties trade at 6.75% to 7.75% cap rates. The after-tax spread is significantly wider (350 to 500+ basis points) because NNN income is sheltered by depreciation while bond interest is taxed as ordinary income at up to 45.8% combined federal, state, and NIIT rates.
The spread compensates for location-specific real estate risk. Dollar General stores are concentrated in rural and secondary markets where resale liquidity is thinner and re-tenanting alternatives are limited. The bond market prices Dollar General as a single $40 billion enterprise. The NNN market prices each individual store based on its location, lease term, and market dynamics. This geographic mismatch creates the widest spread in the IG 180 database.
Yes, but Dollar General sits at the floor of investment grade at Moody’s (Baa3) after a one-notch downgrade in March 2025. S&P affirmed at BBB with a stable outlook in September 2025. Investors should monitor Moody’s closely because one additional downgrade would push Dollar General into high-yield territory, which could affect both bond prices and NNN property values. For the full credit analysis, see the Dollar General Credit Rating and NNN Cap Rate page.
Considering Dollar General NNN?
We source Dollar General NNN properties nationally across all lease terms and price points. On the majority of NNN transactions, the listing broker pays a cooperating commission, so there is typically no separate fee to you as the buyer for professional representation.
Find It — On-market and off-market Dollar General NNN sourced and underwritten for your criteria.
Fund It — 150+ lender relationships. DG’s BBB/Baa3 credit qualifies for competitive NNN financing terms.
Exit It — Dollar General is the most liquid NNN tenant in the market. When you sell, buyer demand is deep.
Exchange It — 1031 exchange into or out of Dollar General NNN with deadline-driven execution.
Educational content only. InvestmentGrade.com is a commercial real estate brokerage and educational publisher. We do not sell, broker, underwrite, or solicit any bonds, securities, or investment products. Yields, ratings, and prices referenced are approximate, fluctuate continuously, and are sourced from public market data as of the date noted. Nothing on this page constitutes investment advice, an offer to sell, or a solicitation to buy any security. Consult a licensed broker‑dealer, registered investment advisor, or tax professional before making any investment decision. For official municipal bond disclosures and trade data, visit EMMA at emma.msrb.org. For SEC investor education, visit investor.gov.
