Realty Income vs. W.P. Carey: Which is the Best Stock to Buy Right Now? - A Comprehensive Comparison and Investment Strategy

When it comes to investing in real estate investment trusts (REITs), Realty Income (NYSE: O) and W.P. Carey (NYSE: WPC) are two of the top options in the net lease space. Both companies have a strong track record of providing steady income and growth, but they have some key differences that can make one a better fit for your investment strategy.

Key Points:

• Realty Income is the largest net lease REIT with a market cap of roughly $50 billion.
• W.P. Carey is the second-largest net lease REIT with a market cap of just under $14 billion.
• Both companies offer similar dividend yields, with Realty Income at 5.6% and W.P. Carey offering just a bit more than 5.6%.
• Realty Income has increased its payout annually for 30 consecutive years, while W.P. Carey reset its dividend lower in late 2023 after exiting the office sector.

How are Realty Income and W.P. Carey similar?

Realty Income and W.P. Carey both own single-tenant properties leased using net leases, which require tenants to pay for most property-level expenses. They both have exposure to retail, warehouse, and industrial assets, with portfolios that include properties in North America and Europe. In many ways, the two net lease REITs are kind of interchangeable, with similar business models and dividend yields.

How are Realty Income and W.P. Carey different?

Despite their similarities, Realty Income and W.P. Carey have some key differences that set them apart:

• Size: Realty Income is a much larger company with a roughly $50 billion market cap compared to W.P. Carey's $14 billion market cap. This means that Realty Income has more resources to invest in new properties and expand its portfolio, but it also requires massive investments each year to maintain its position as an industry leader.
• Focus: W.P. Carey is more heavily tilted toward industrial and warehouse assets, which tend to be larger than retail properties owned by Realty Income. This gives W.P. Carey a more diverse portfolio and the potential for faster growth.
• Dividend policy: Realty Income has increased its payout annually for 30 consecutive years, while W.P. Carey reset its dividend lower in late 2023 after exiting the office sector. However, W.P. Carey quickly restarted increasing its dividend every quarter, as it was doing prior to the dividend reduction, but its streak still falls well short of Realty Income's.

Should you invest in Realty Income or W.P. Carey?

Ultimately, the decision between investing in Realty Income or W.P. Carey depends on your investment goals and risk tolerance. Realty Income is a slow-moving industry giant with a strong foundation and a long history of dividend increases, making it a good choice for conservative investors who want stability and predictability in their investments. On the other hand, W.P. Carey is smaller and more aggressive, leading to faster growth and the potential for higher returns for investors who are willing to take on more risk.

If you're looking for a combination of yield and dividend growth, W.P. Carey may be the better choice for you. However, if you're looking for a safe and stable investment with a long track record of dividend increases, Realty Income may be the better fit for your portfolio. Or, you could consider owning both companies to get the best of both worlds!

In conclusion, both Realty Income and W.P. Carey offer attractive investment opportunities in the net lease space with their strong track records of providing steady income and growth potential for investors who are willing to take on the associated risks or seek stability in their investments respectively