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This Nearly 6.5%-Yielding Dividend Stock Made $1.6 Billion in Acquisitions in 2024, Setting the Stage for More Dividend Growth in 2025
WPCW. P. Carey(WPC) The Motley Fool·2025-01-11 10:43

Portfolio Acquisitions and Investments - The company spent 200milliontoacquire106discountretailpropertiesacross21states,leasedtoDollarGeneral,withaweighted−averageremainingleasetermof14.3yearsandbuilt−inrentescalation[1]−ItplanstopurchasenineadditionalstoresinQ12024foraround200 million to acquire 106 discount retail properties across 21 states, leased to Dollar General, with a weighted-average remaining lease term of 14.3 years and built-in rent escalation [1] - It plans to purchase nine additional stores in Q1 2024 for around 20 million [1] - The company acquired a 1.1 million-square-foot U.S. battery factory leased to Canadian Solar for 100million,witha12.4−yearNNNleaseandrentescalationclause[1]−Itcompleteda100 million, with a 12.4-year NNN lease and rent escalation clause [1] - It completed a 100 million sale-leaseback of a five-building manufacturing and industrial campus in Mexico, totaling 1.1 million square feet, with a 25-year NNN lease and rent escalators [1] - The company purchased a 209,000-square-foot U.S. data center leased to a Brookfield Infrastructure subsidiary for 100million,withan11.1−yearNNNleaseandrentescalators[1]PortfolioRestructuringandStrategy−Thecompanyspentmuchof2023remodelingitsportfoliobyremovingofficesandnon−coreproperties,allowingittoupgradetohigher−qualitypropertieswithbetterlong−termprospects[3]−Itexitedtheofficesectorandsoldoffothernon−coreproperties,usingtheproceedstoinvest100 million, with an 11.1-year NNN lease and rent escalators [1] Portfolio Restructuring and Strategy - The company spent much of 2023 remodeling its portfolio by removing offices and non-core properties, allowing it to upgrade to higher-quality properties with better long-term prospects [3] - It exited the office sector and sold off other non-core properties, using the proceeds to invest 1.6 billion in new properties [5] - The company focused on industrial real estate (60% of investment volume) and retail properties (30%), with 75% of investments in North America and 25% in Europe [8] - It achieved a strong initial real estate cap rate of 7.5%, with an average yield of around 9% when factoring in rent growth over the lease terms [8] Financial Performance and Dividend Growth - The company raised its dividend four times in 2023, with a current yield of nearly 6.5%, and is poised for further growth in 2025 due to new investments and growth drivers [6] - It ended 2024 with a total investment volume of 1.6billion,withinitsguidancerangeof1.6 billion, within its guidance range of 1.25 billion to 1.75billion,andarecordQ4investmentvolumeof1.75 billion, and a record Q4 investment volume of 845 million [7] - The company's strong finish in 2024 positions it to grow its adjusted funds from operations (FFO) and dividend in 2025, supported by best-in-class rent escalation [9] Liquidity and Future Investment Potential - The company has substantial liquidity from selling off its office portfolio and other non-core properties, enabling it to continue making accretive acquisitions without issuing additional stock [2][10] - It holds other non-core properties, including 78 self-storage centers, four hotels, and two student housing properties, as well as a stake in cold storage REIT Lineage Logistics, which could be liquidated [11] - The company is well-positioned to continue making investments in 2025, leveraging its strong liquidity and portfolio restructuring efforts [10]