Cash and Carey
Diversified real estate investment trust (REIT) W.P. Carey (NYSE: WPC) was recently down 20 percent 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 percent of its portfolio consists of industrial properties and warehouse spaces, some of which have enjoyed tailwinds from the pandemicdriven growth in e-commerce. The company’s diversification has paid off. Also impressive, W.P. Carey collected 98 percent of the rent it billed in the third quarter. W.P. Carey is a “net-lease” REIT. Essentially, it owns singletenant properties, and its tenants are responsible for most of the operating costs of the assets they occupy. That’s generally considered a fairly low-risk approach to owning real estate. Furthermore, W.P. Carey tends to buy properties directly in sale-leaseback 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 percent 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.