Shares of W.P. Carey WPC closed 1.65% higher on March 14 following the company’s announcement of a 1.1% dividend hike on March 13. WPC will now pay out a first-quarter 2025 cash dividend of 89 cents per share, up from 88 cents paid in the prior quarter.

The increased amount will be paid out on April 15 to shareholders on record as of March 31, 2025. Based on the increased rate, the annual dividend comes to $3.56 a share, resulting in an annualized yield of 5.7%, considering WPC’s closing price of $62.66 on March 14.

Solid dividend payouts are arguably the biggest enticement for investment in REIT stocks. However, in December 2023, WPC reduced its dividend to 86 cents from the prior quarter's dividend payment of $1.07. The move resulted from the company’s strategic plan to exit its office assets and maintain a lower payout ratio. Thereafter, it maintained a disciplined capital distribution strategy and increased its dividend three times, including the most recent one, which is encouraging. Check out W.P. Carey’s dividend history here.

WPC’s Dividend Payout: Sustainable or Not?

W.P. Carey has one of the largest portfolios of single-tenant net lease commercial real estate in the United States and Northern and Western Europe. The company invests in assets that are mission-critical for its tenants’ operations. As such, due to the inherent nature of its portfolio, the REIT can generate better risk-adjusted returns due to higher occupancy. The portfolio occupancy as of Dec. 31, 2024 was 98.6%.

Moreover, the portfolio is well-diversified by tenant, industry, property type and geography, aiding steady revenue generation. The existence of rent escalations yields stable cash flows. More than 99% of annualized base rent comes from leases with contractual rent increases, with 51% linked to the consumer price index. The company witnessed contractual same-store rent growth of 2.6% for the fourth quarter of 2024.

WPC has a healthy balance sheet position with ample liquidity. The company exited the fourth quarter of 2024 with cash and cash equivalents of $640 million. The company’s share of pro rata net debt to EBITDA was 5.5X. The company also enjoys investment grade ratings of BBB+ from S&P Global Ratings and Baa1 from Moody’s, rendering it favorable access to the debt market.

Last month, WPC reported a decent fourth-quarter 2024 earnings performance. Its adjusted funds for operations per share of $1.21 beat the Zacks Consensus Estimate of $1.19. The figure also improved 1.7% from the year-ago quarter. Results reflected favorable growth in lease revenues due to net investment activity and rent escalations.

Hence, with solid fundamentals and earnings performance, we expect the latest dividend rate to be sustainable in the long run.

Shares of this Zacks Rank #3 (Hold) company have rallied 15.5% over the past three months, outperforming the industry’s growth of 3.5%.

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Other REITs Who Recently Announced Dividend Increases

On March 6, delighting its shareholders, American Tower Corporation AMT announced a 4.9% hike in its quarterly dividend on the company’s common stock to $1.70 per share from $1.62 paid out earlier. The raised dividend is scheduled to be paid out on April 28 to shareholders of record as of April 11, 2025. AMT recently hinted about its plan to resume dividend growth at mid-single-digit rates in 2025 after focusing on deleveraging in prior years. In 2024, amid the setbacks that impacted its growth rate, this tower REIT had paused its dividend hikes for the year.

On March 12, Realty Income Corporation O announced an increase in its common stock monthly cash dividend to 26.85 cents per share from 26.80 cents paid out earlier. Though the latest hike marks a marginal increase from the prior dividend, it marks its 130th dividend hike since its listing on the NYSE in 1994. The increased amount will be paid out on April 15 to its shareholders on record as of April 1, 2025.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

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