W.P. Carey Inc. (WPC) is one of the largest net lease real estate investment trusts (REITs) in the world with a diverse portfolio of more than 1,200 properties covering about 142 million square feet.
The company’s portfolio primarily consists of industrial, warehouse, office, retail, and self-storage properties with contractual rent increases, 98.9% occupancy rate, and a 10.6 year weighted average lease term. With about 40% of its properties located in Europe, the company also provides shareholders with a level of geographic diversification.
From an investment standpoint, the company has increased its dividend every year since going public in 1998 with a conservative and stable payout ratio since its conversion to a REIT in 2012. Management also continues to pursue capital investment projects to build value with $172 million worth of development projects in progress, as of September 30, 2020.
Strongly Positioned in Commercial Real Estate Space
Commercial REITs experienced significant declines throughout the COVID-19 pandemic. In particular, restaurant and shopping mall REITs have struggled with growing delinquencies and lower occupancy rates. The good news is that most REITs are conservatively financed and able to weather the short-term volatility.
During the third quarter, W.P. Carey reported revenue that fell just 1.8% to $297.3 million, beating consensus estimates by $400,000, and fund flow from operations (FFO) of $1.15 per share, beating consensus estimates by $0.05 per share. The company also reinstated guidance for fiscal year 2020 with an adjusted FFO range of $4.65 to $4.75 per diluted share, in line with consensus estimates.
W.P. Carey’s relatively strong performance led it to increase its quarterly dividend to $1.046 per share or a forward yield of just over 6%. The dividend is payable on January 15, 2021 to shareholders on record as of December 31, 2020.
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