Reason to Invest in W.P. Carey (WPC)
W.P. Carey: A Steady Choice for Real Estate Investment
W.P. Carey, one of the largest REITs specializing in net lease properties, continues to be a great option for investors seeking passive income from real estate. With a current stock price under $65, the REIT offers an attractive entry point for those looking to join its ranks.
The company's strategies for growth are multifaceted, utilizing free cash flow, proceeds from non-core property sales, and its investment-grade balance sheet to acquire new properties. This year, W.P. Carey has set its sights on investments between $1 billion and $1.5 billion, providing incremental sources of rising rental income.
Most of W.P. Carey's long-term net leases include clauses for rent increases based on fixed rates each year or inflation indexes like the Consumer Price Index. This ensures that the REIT's rental income is not only stable but also protected against inflation. As a result, the current yield of W.P. Carey's dividend is above 5.5%, a figure much higher than the S&P 500's 1.2%.
W.P. Carey pays a quarterly dividend of $0.90 per share, or $3.60 annually. The dividend is expected to grow by 3.4% year-over-year, with the second quarter 2025 cash dividend of $0.90 per share. This steady, moderately growing income distribution is supported by strong portfolio occupancy (~98.2%) and a diversified tenant base.
The two main growth drivers for W.P. Carey are escalating rental rates and new investments. The contractual same-store rent growth contributing to Adjusted Funds from Operations (AFFO) is reported at 2.3% year-over-year on a constant currency basis. This growth, combined with the expected full-year investment volume between $1.4 billion and $1.8 billion, supports growth in recurring cash flow.
The predicted annual growth rate for W.P. Carey's AFFO for 2025 is approximately 4.5%. Management has raised AFFO guidance to a range between $4.87 and $4.95 per share. This mid-single-digit growth in AFFO, along with the slightly lower but positive growth in dividends, makes W.P. Carey an attractive choice for investors seeking steady returns from the real estate sector.
W.P. Carey focuses on property sectors with better long-term growth drivers, such as industrial real estate. This focus ensures that the REIT's investments are well-positioned for the future, providing investors with highly stable rental income from tenants who cover all property operating expenses.
In conclusion, W.P. Carey is a REIT that offers investors a unique blend of stability and growth. With its attractive dividend yield, expected dividend growth, and mid-single-digit AFFO growth, W.P. Carey is a great REIT to buy and hold for passive income from real estate.
[1] W.P. Carey Q1 2025 Earnings Release [2] W.P. Carey Q4 2024 Earnings Release [3] W.P. Carey 2024 Full-Year Earnings Release [4] W.P. Carey 2025 Guidance Presentation
[1] Investors considering finance opportunities in the real-estate sector may find W.P. Carey an attractive choice due to its stable dividend yield. [2] The REIT's focus on industrial real estate ensures long-term growth, making it a well-positioned investment for passive income. [3] The company's strategies, including new investments and escalating rental rates, are anticipated to drive mid-single-digit growth in Adjusted Funds from Operations (AFFO) over the next year, offering incremental sources of rising rental income. [4] With a current yield above 5.5%, W.P. Carey's dividend significantly outpaces that of the S&P 500, making it a valuable addition to any investor's finance portfolio.
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