Two High-Earnings Dividend Shares Close to their Yearly Low Points, Worth Purchasing during Slumps
Looking for profitable passive income stocks? Look no further than real estate investment trusts (REITs) W.P. Carey (WPC -0.31%) and Realty Income (O -0.78%). Despite recent market conditions, these reliable dividend payers have slipped to near 52-week lows.
The Federal Reserve lowered its target interest rate in 2024, but the market's outlook on stronger economic growth, higher inflation, and mounting debt levels has pushed 10-year Treasury note yields up by nearly 19% over the last three months. With these yields rising, shares of slow but steady dividend growth stocks like W.P. Carey and Realty Income have taken a hit. But with yields over 6%, investing in these REITs now can be a smart move.
1. W.P. Carey
W.P. Carey is an REIT with a broad tenant base and over 1,400 properties. The spin-off of its office portfolio into a new company in 2023 has put pressure on its share price. To compensate, the REIT lowered its dividend in 2023. However, with the stock near a 52-week low, the current 6.5% yield can be hard to ignore for income-seeking investors.
W.P. Carey's diversified portfolio, strong occupancy rates, and conservative payout strategy make it an attractive REIT. The company maintains a high 98.8% occupancy rate and has a long-average lease term of 12.2 years. This diversification reduces the risk of relying on a single market or tenant for revenue.
The REIT's biggest tenant doesn't account for more than 2.7% of total annualized base rent. Inflation-linked rent raises and its highly diversified portfolio further strengthen W.P. Carey's position as a reliable income source in retirement years.
2. Realty Income
Realty Income's stock price has slipped by about 15% over the past three months, offering a 6% yield and regular monthly distributions. Despite no dividend cut, this REIT has consistently raised its payout every quarter for over 27 years.
Realty Income's focus on resilient retail and industrial properties – such as Dollar General and Walgreens – helps it maintain a stable income stream during both good and bad economic times. With its tenants responsible for just 3.3% of annualized rent each, this REIT boasts a robust collection of payments from its diverse tenant base.
Realty Income's conservative payout ratio ensures it can maintain its near-90% dividend payout ratio even in challenging economic times. Its diverse tenant base and resilient property focus make Realty Income a reliable income-generating investment for most investors.
- In the context of financial planning, ultra-safe investments like 10-year Treasury notes might seem appealing due to their lower risk profile, but consider the potential for lower returns compared to passive income-generating assets like REITs.
- For those with a longer-term investment horizon, diversifying their portfolio with both treasury bonds and REITs like W.P. Carey and Realty Income could provide a balanced approach to income generation, offering a mix of security and growth potential.
