Is now a good time to buy W.P. Carey? $WPC

If you’re interested in a solid company that pays over a 6% dividend yield then the answer is yes. It might be an especially good time to buy stock in this REIT given it’s recent 20% slump in stock price.

Despite a the recent slump in share price, the company’s dividend yield has surpassed 6% and is at its highest level since the beginning of the pandemic. Higher interest rates and office exposure are the likely factors causing the short-term underperformance, but these issues shouldn’t threaten the company’s dividend or long-term outlook.

W.P. Carey has a solid balance sheet and financial flexibility, which has been recognized by a credit rating upgrade from S&P to BBB+. The company’s above-industry average operating performance, recession-resistant properties, and solid liquidity provide confidence in managing upcoming debt maturities.

The company’s leases include rent escalators, and around 60% of them are CPI-linked, that provide steady cash flow and help to offset increasing borrowing costs. W.P. Carey boasts a 99% occupancy rate for its diversified portfolio of essential properties, including industrial, warehouse, retail, office, and self-storage markets.

The company’s disciplined approach to investing in creditworthy tenants and long-dated lease terms (~11 years on average) have helped maintain strong occupancy even during the pandemic. W.P. Carey has been reducing its office exposure over the past six years, with a further decrease expected in the future, mitigating concerns over the troubled office industry.

Even in an extreme scenario where the firm loses half of its cash flow from office properties, the payout ratio would remain below 90%.

While refinancing needs and office exposure should be monitored, they are not expected to significantly impact the company’s long-term trajectory, aside from potentially lower dividend growth in the next few years.

COMPANY NAME (SYM) has a current dividend yield of 0.00% and is rated as “RATING” by SimplySafeDividends. I hold SYM in my Medium Yield Portfolio. In total SYM is 0.0% of my portfolio.

Disclaimer and Kevin Bae are not registered investment advisors, brokers or dealers. Kevin Bae may have positions in any financial instrument, product, or company mentioned on or on the Chasing the Yield podcast. Information provided by and the Chasing the Yield Podcast is provided for information and entertainment purposes only and are not intended as advice or a recommendation or an offer or solicitation for the purchase or sale of any security or financial instrument. All opinions are based upon sources believed to be accurate and are provided in good faith. No warranty, representation, or guarantee, expressed or implied, is made as to the accuracy of the information contained herein. Past performance is not an indicator of future results.

Please contact an investment professional if you have any questions regarding an investment.