High-Yield REITs Show Strong Potential for Passive Income Growth

Investors should consider high-yield dividend stocks for steady income. With a yield of 5.6%, W.P. Carey and Realty Income offer reliable returns, enhancing portfolio strength. The analysis highlights promising earnings growth and consistent dividend payouts.

Date: 26-02-2025

AI Rating: 6

**Earnings Per Share (EPS):** The report indicates that W.P. Carey expects adjusted funds from operations (FFO), a proxy for EPS in REITs, to rise at least 2.6% year over year, with a range between $4.82 and $4.92 per share by 2025. This growth is significant as it ensures the ability to meet its current dividend commitment of $3.52 per share.

For Realty Income, fourth-quarter adjusted FFO rose 4.8% year over year to $1.05 per share but fell short of Wall Street's expectations by $0.01. Their adjusted FFO guidance for 2025 is between $4.22 and $4.28 per share, which is slightly below analyst expectations of $4.32 per share. This indicates a growth expectation of just 1% this year, which suggests a cautious outlook.

**Dividend Stability:** Both W.P. Carey and Realty Income are noted for their commitment to stable dividends. W.P. Carey is in the process of increasing its dividend payout after a reduction in 2023, while Realty Income maintains a long-standing record of dividend increases. Realty Income just completed its 129th dividend increase, showcasing reliability.

**Revenue Growth:** Both REIT stocks, despite their respective pricing pressures, generate predictable cash flows and manage diversified tenant bases with long-term leases. This diversified tenant list minimizes risk, as the tenants need only to meet their rental obligations. W.P. Carey’s diversified tenant approach shields it from potential revenue dips caused by any single tenant, further solidifying its revenue growth.

Overall, the focus on high-yield dividend stocks like W.P. Carey and Realty Income indicates a positive forecast for investors seeking passive income. The expected growth in FFO and a consistent dividend approach suggest potential for maintaining and raising stock prices in the dividend segment, appealing to income-focused investors.

Stocks: WPC O