In case you are wanting to buy inventory in Realty Revenue (O -0.56%), you must most likely even be contemplating competitor W.P. Carey (WPC -0.53%). There are a variety of causes for this, from their net-lease enterprise fashions to their dividends. This is a have a look at some key variations and similarities between these two actual property funding trusts (REITs).
How are Realty Revenue and W.P. Carey comparable?
To start out, Realty Revenue and W.P. Carey do very (very!) comparable issues. They each personal single-tenant properties leased utilizing web leases, which require tenants to pay for many property-level bills.
They each have publicity to retail, warehouse, and industrial belongings, with every dipping their toes into distinctive, one-off properties. They each have portfolios with publicity to North America and Europe.
And each have very lengthy histories. W.P. Carey truly helped to popularize the web lease idea earlier than it was a public entity.
Picture supply: Getty Photographs.
In some ways, the 2 web lease REITs are form of interchangeable. In reality, they even have comparable dividend yields, with Realty Revenue at 5.6% and W.P. Carey providing only a bit greater than 5.6%. However no two corporations are precisely the identical.
How are Realty Revenue and W.P. Carey completely different?
Realty Revenue, for example, is a reasonably large firm with a roughly $50 billion market cap. W.P. Carey’s market cap is just a little beneath $14 billion. That mentioned, the latter is the second-largest web lease REIT. Realty Revenue simply occurs to be an {industry} big. That extends to the respective portfolios, with Realty Revenue proudly owning over 15,600 properties and W.P. Carey “simply” 1,600 properties or so.
That distinction requires a bit extra clarification, nevertheless, as a result of W.P. Carey is extra closely tilted towards industrial and warehouse belongings, which are typically bigger. Realty Revenue’s focus is extra on retail properties, which are typically smaller.
In some methods, their portfolios are literally considerably complementary to one another. It would not be a foul plan to personal each of those industry-leading web lease REITs.
Nonetheless, there’s one other massive distinction which may trouble some dividend buyers. Realty Revenue has elevated its payout yearly for 30 consecutive years. W.P. Carey reset its dividend decrease in late 2023 after making the choice to exit the workplace sector, a transfer Realty Revenue made a number of years earlier (and not using a dividend lower). One other distinction is that Realty Revenue pays out its dividend month-to-month, whereas W.P. Carey pays on a quarterly foundation.
W.P. Carey rapidly restarted rising its dividend each quarter, because it was doing previous to the dividend discount, however its streak nonetheless falls effectively in need of Realty Revenue’s.
That mentioned, Realty Revenue is so massive that it requires large investments annually to develop. That exhibits up within the dividend, which it pays month-to-month, however will increase quarterly, as effectively. However the final improve was a tiny 0.2% or so (2.3% annualized).
W.P. Carey’s smaller measurement permits it to develop extra rapidly, with its most up-to-date quarterly dividend improve amounting to roughly 1.1% (3.5% annualized). For buyers who need a mixture of yield and dividend development, W.P. Carey most likely comes out on prime right here.
Suppose security versus threat when you think about Realty Revenue and W.P. Carey
Ultimately, Realty Revenue is one thing of a slow-moving {industry} big. It has a powerful basis, however it is not going to excite you. W.P. Carey is smaller and extra aggressive, resulting in quicker development.
Given the same yields, Realty Revenue will most likely curiosity extra conservative sorts whereas W.P. Carey will entice extra aggressive earnings buyers. Or, as famous, you may purchase them each, which could provide the better of each worlds.
