Best Stock to Buy Right Now: Realty Income vs. W.P. Carey

If you’re examining Realty Income, it would be beneficial for you to also investigate W.P. Carey, and the reverse is also true.

In the specialized field of net lease real estate, these two Real Estate Investment Trusts (REITs) stand out as the market leaders. While they share several characteristics, it’s crucial to note that there are distinct differences between them as well.

Here’s what you need to know to make the final call.

The business model

Both Realty Income and W.P. Carey primarily own single-tenant properties where the tenant bears most operational costs, which is commonly referred to as a net lease. Essentially, these net lease properties are formed when a company decides to sell an essential property while simultaneously entering into a long-term lease agreement. In essence, this transaction can be viewed as a financing method, since the seller continues to exercise significant control over the property even after it becomes the tenant.

As a passionate investor, I delight in the strategic growth of net lease REITs like Realty Income and W.P. Carey. These investments offer me the opportunity to expand my portfolio with properties that boast dependable tenants and lengthy lease agreements. Moreover, these leases often come equipped with periodic rent increases, ensuring a steady stream of income over time.

Viewed from a certain angle, Realty Income and W.P. Carey can be considered as virtually the same. However, they share even more commonalities.

Seen in a particular light, Realty Income and W.P. Carey are practically indistinguishable. Yet, they have numerous similarities.

They possess real estate not only in North America but also in Europe, representing a greater geographic diversity compared to many of their competitors. Furthermore, they distribute their properties across retail, warehouse, and industrial sectors, with a substantial portion of “other” property types intermingled within each portfolio.

If you are looking for a diversified REIT, both will fit that bill quite well.

Essentially, the main distinction lies in the focus areas: Reality Income primarily invests in retail properties, accounting for about three-quarters of its rental income, while W.P. Carey predominantly concentrates on industrial properties, representing approximately two-thirds of its rental earnings.

Dividend similarities and differences

In this context, the key distinctions become apparent when looking at the dividends, but it’s important to note that there are also some noteworthy similarities that need to be taken into account initially.

Realty Income’s dividend return is approximately 5.6%, while W.P. Carey’s is slightly lower at about 5.8%. These figures significantly surpass the S&P 500 index’s yield of 1.3% and the average Real Estate Investment Trust (REIT) yield, which hovers around 4.1%.

Furthermore, a significant disparity exists. Realty Income boasts an impressive record of raising its dividends annually for 30 consecutive years. Within this remarkable span, it has managed to boost its dividends for a staggering 110 straight quarters. Conversely, W.P. Carey’s dividend streak stands at only six consecutive quarters, thus equating to one year on an annual basis.

If you can’t handle a dividend cutter, then Realty Income is the easy winner here.

However, it’s important to note that W.P. Carey made a strategic decision to depart from the problematic office sector at the end of 2023, leading to a reduction in its dividend after 24 consecutive years of growth. This move, despite being a cut, significantly enhanced the company’s long-term prospects. Interestingly, following this adjustment, the dividend resumed its regular quarterly increases, returning to the pattern that was typical before the cut.

If you’re open to considering W.P. Carey favorably, it seems that the company presents a more appealing investment opportunity now compared to before the dividend adjustment. Moreover, with the cash obtained from selling offices and investing in new properties, W.P. Carey may outperform Realty Income in terms of growth potential over the coming years.

How much risk are you willing to take on?

For those who prefer a conservative dividend investment approach, Realty Income is currently the top REIT to consider purchasing. If you’re willing to tolerate some uncertainty, W.P. Carey with its slightly higher yield may be the more appealing option. However, the distinct yet comparable portfolios of these two large net lease REITs might lead many investors to conclude that owning both could be the wisest decision of all.

2025-07-21 01:28

The business model

Dividend similarities and differences

How much risk are you willing to take on?

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