1 Magnificent High-Yield Stock Down 30% to Buy and Hold Forever

Core Viewpoint - The S&P 500 index is near all-time highs with a yield of approximately 1.3%, making it challenging for dividend investors to find high-yield stocks. However, W.P. Carey, with a yield of 5.8%, presents an attractive opportunity for those willing to invest when others are selling [1]. Company Overview - W.P. Carey is a net lease real estate investment trust (REIT) that primarily owns single-tenant properties, where tenants are responsible for most property-level expenses. It ranks second in the net lease REIT sector with a market cap of $13 billion, following Realty Income at $50 billion and ahead of NNN REIT at $8 billion [2]. - Net lease REITs are generally considered stable income stocks, with their business driven by sale/leaseback deals. However, higher interest rates have negatively impacted their profitability and ability to secure new deals, leading to a decline in W.P. Carey's stock, which is down about 30% from its 2019 highs [4]. Dividend Performance - W.P. Carey cut its dividend in 2023, while its peers, NNN REIT and Realty Income, have consistently increased their dividends for 36 and 30 years, respectively. Despite the cut, W.P. Carey has resumed increasing its dividend quarterly since then, indicating a recovery [5][7]. - The company’s focus has shifted away from the troubled office sector to more lucrative industrial, warehouse, and retail properties, which has improved its portfolio [7][8]. Growth Potential - The exit from the office sector has provided W.P. Carey with cash to invest in new properties, which is expected to enhance growth in the coming years. The company’s last dividend increase was over 3% year-over-year, compared to Realty Income's 0.2% increase [9][10]. - W.P. Carey incorporates inflation-linked rent escalators in its leases, which supports growth and differentiates it from peers that are less aggressive in this regard [10]. Investment Consideration - Investors often overlook W.P. Carey in favor of Realty Income or NNN REIT, but the company’s strong dividend growth history and differentiated property focus on industrial and warehouse assets make it a compelling addition to a net lease portfolio [11][12].