Cash and Carey

Diversified real estate investment trust (REIT) W.P. Carey ( NYSE: WPC) was recently down 20% from its 52-week high, in part because of its exposure to sectors hit hard by COVID-19, such as retail and restaurants. But about 47% of its portfolio consists of industrial properties and warehouse spaces, some of which have enjoyed tailwinds from the pandemic- driven growth in e- commerce. The company’s diversification has paid off. Also impressive, W.P. Carey collected 98% of the rent it billed in the third quarter.

W.P. Carey is a “net-lease” REIT. Essentially, it owns single-tenant properties, and its tenants are responsible for most of the operating costs of the assets they occupy. That’s generally considered a fairly lowrisk approach to owning real estate. Furthermore, W.P. Carey tends to buy properties directly in saleleaseback transactions, finding companies that are looking to raise cash (to shore up their balance sheets or invest in growth) by selling properties they still want to occupy.

Long-term investors in W.P. Carey can profit from its solid business model and its hefty dividend, which recently yielded nearly 6% and has been increased annually for more than two decades. It has a strong performance history, and recently sported a reasonable valuation, with shares recently trading for around 15.5 times its cash flow per share

For those interested in real estate income, W.P. Carey is worth a closer look.