Dividend Opportunities in Beaten Down REITs: WPC and O

Investors should pay attention to W.P. Carey and Realty Income as they offer attractive yields amid recent price declines caused by rising Treasury yields. These REITs stand out for their reliability in dividend payments.

Date: 05-01-2025

AI Rating: 7

Investment Focus on REITs
W.P. Carey (WPC) and Realty Income (O) are highlighted as attractive investment opportunities for those seeking passive income through dividends. Both companies are noted for their strong dividend-paying history, despite recent challenges that have led their stock prices to near 52-week lows.

Impact of Federal Reserve Actions
The Federal Reserve's recent decision to lower its target interest rate has led to rising 10-year Treasury yields, nearing a 19% increase in the last three months. This rise has made traditionally steady dividend growth stocks, such as W.P. Carey and Realty Income, less appealing to some investors, hence their price drops.

W.P. Carey Analysis
W.P. Carey has undergone pressure since the spin-off of its office portfolio. The REIT has cut its dividend in 2023 to adjust for reduced rental income from office properties. However, it offers a yield of 6.5% at current prices and has a solid track record of raising its dividend, increasing payouts four times last year. The Funds from Operations (FFO) stands at $5.26 per share for the 12 months ending September 2024, well above the dividend payout of $3.52 annually, indicating a robust income stream.

Realty Income Analysis
Realty Income has also experienced a stock price decline of approximately 15%. Unlike W.P. Carey, it has a consistent history of raising its dividend, with a current yield of 6%. The latest FFO is reported at $3.89 per share, comfortably supporting its annual dividend obligation of $3.168. Realty Income's focus on resilient properties positions it well for ongoing cash flow and reliable dividend increases into the future.

Stocks: WPC O