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Realty Income Vs. W. P. Carey: And The Winner Is...

Jun. 12, 2020 8:35 AM ETRealty Income Corporation (O), WPCRFI, RNP, RQI, SRC, VNQ, WBA, KBWY241 Comments


  • Triple-net REITs occupy an exalted place in the "REIT-sphere" but the pandemic has taken some of their shine.
  • The pandemic also has created opportunities to get in at the ground floor (or close to) of solid businesses.
  • To this end, we compare the recent metrics of two quality triple-net REITs and give you our preference.
  • Looking for a portfolio of ideas like this one? Members of High Dividend Opportunities get exclusive access to our model portfolio. Get started today »

Co-produced with Trapping Value

Real estate traditionally has been a defensive asset as tenants shell out the rent in almost all cases. That was the theory. In practice however, things got far more out of control than what anyone envisioned. Today, we look at one of our favorite segments in real estate, the triple-nets.


The triple-net REIT space is one that attracts a fair deal of investment capital. Transferring all the capital expenditures onto the tenant reduces risk in the business, which in turn lowers the cost of capital. Landlords sit back and collect rent from mainly single-tenant properties with extremely long leases. Rents go up annually with inflation or via some other fixed escalators. This is about as close to getting an equity with "bond-like" features as there is. In addition, since real estate appreciates over time, it also has built-in inflation protection.

There are a fair number of triple-net REITs out there, many of which we have covered at some point or another. We recently highlighted Spirit Realty Capital (SRC) which came back into our buy zone after we had booked nice profits a few months earlier. Today, we do a head-to-head comparison of two picks and tell you why each one can have a role in your portfolio. We also pick a winner for this unusual environment.

Realty Income Corporation & W. P. Carey Inc.

Realty Income (O) is one of the newest "Dividend Aristocrats," being introduced into the S&P Dividend Aristocrats Index in early February 2020. It got this title after raising its dividend for each of the past 25 consecutive years. O prides itself on being a monthly dividend entity and is one of the few REITs listed in the US (unlike all those listed in Canada) that pays dividends monthly.

W. P. Carey

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This article was written by

Rida Morwa profile picture

I am a former Investment and Commercial Banker with over 35 years of experience in the field. I have been advising both individuals and institutional clients on high-yield investment strategies since 1991. I am the lead analyst at High Dividend Opportunities, the #1 service on Seeking Alpha for 6 years running.

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Analyst’s Disclosure: I am/we are long O, WPC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (241)

Pablo profile picture
My O is still doing better than my WPC. But owners of both such as myself are doing just fine today. Throw my STOR and MPW in the mix and I am ready to retire NOW. Come on January 2021!!
WPC Just cut the dividend on its 100% owned CPA-18 non-traded Reit. Does this action show increased dividend risk for its common stock? Why cut the dividend on the non-traded reit when the dividend is just an accounting transaction and not a cash transaction? Are they trying to reduce value of the Reit prior to liquidation? What is your opinion?
Maybe this is to roll up CPA-18 into WPC?
Should I get WPC or RQI currently? RQI is such an attractive price.
Sundance Utah profile picture
I bought RQI.
@Sundance Utah yes I think for the short term rqi is good. Did you buy for longterm or short?
Sundance Utah profile picture
@Maknora Long term

I don't know the future, but I see a real estate boom unlike any in US history. The fact that so many are pessimistic on real estate now is all the better.
Long time WPC holder and recent O purchaser in lesser amount. Feel comfortable with both - your info confirms my decisions.
pocsai attila profile picture
How about keep both!?
I loved this comparison. Thank you.
lshiang profile picture
Facing the reality, both are worse than $SPY and much worse than $QQQ YTD. I have doubt that the REIT sector is a valuable alternative for equity investment.
QQQ is tech-focused and pays a tiny yield. It's generally not used as a benchmark (except for tech stocks/funds). So let's talk about SPY. The total return chart at the end of the article shows that over time, both WPC and O have handily beaten SPY. So if you really want to "face reality," you need to go back further than YTD.
johnnyvolvo profile picture
Rida, with you being a big dividend investor, I wanted to ask you what you thought of WPC vs T at current levels.
I realize they are totally different animals but...both are compelling.
Both are unlikely to cut divvy IMO.
WPC should grow dividend faster, all things equal.
Not sure who has the edge in price appreciation.
5 G is coming.
T has a nearly unequaled track record however T currently has a lot of debt.

Neither one is a bad investment considering safety and the current yield on invested capital.
Which is the better 5 and 10 year investment though?
One thing to keep in mind when comparing these two dividends, T is a qualified dividend and O is not. This impacts how they are taxed. Qualified dividends are very tax friendly.
johnnyvolvo profile picture
Both are held in tax-advantaged accounts so I don't need to worry about that consideration.
Pass on O !!!!!!!
Beware of retail real estate- Loserville!!!!!! Amazon will continue to destroy retail — online is where it is happening.
Bluegrassriver profile picture
Until you get a package stolen off your porch. That's the fastest growing business-not Amazon.
allday1234 profile picture
But AMZN also owns RING so it is the perfect add-on
This way you can watch you package be taken.

Bluegrassriver profile picture
Ring is probably the second fastest growing business after Amazon! Watch your package be stolen and put it on the Next Door Neighborhood site. The police love getting those Ring videos from citizens, smile, and shake their heads.
whiff profile picture
Have owned O for a long time - have dabbled in other names with limited success - think I will sell half of my O and buy WPC.
Clearly WPC is better than O during the pandemic. Wait till August where the Coronavirus renter relief program expires and we can talk more after that.
@Ronaldo123 I suspect politicians will keep bailing out companies for as long as it takes. They've already been coming up with ideas.
Jamjack profile picture
Great article. Really enjoy the comments to for the most part on topic to the point and support for positions well stated. I have no stock position in either. I do own 401k REIT fund and ETF. Love REITS as a sector. A blessing in a income starved world.
nm10066 profile picture
@Rida Morwa Rida, very good comparative analysis, most of which I was already aware of, but I had chose “O” for several reasons. 1. I do not like the over exposure in Europe that WPC has, simple because I can’t track the political risk and react in a timely way. At least in the U.S you can get more timely information. 2, I bought in to “O’ in the low $40’s, so my average yield is considerable better, 3, I know a lot more about the domestic companies that lease from “O” then I do from the companies leasing to WPC outside of the U.S., and finally, the monthly dividend gives me more timely income to reinvest in a timely manner to take advantage of market fluctuations. Now, would I buy WPC, yes, in a heart beat, especially on pull backs. Great company, great record, and with “O’ moving up WPC looks more and more attractive. Good work on your part as always.
m8 profile picture
19 Jun. 2020
Are you understating W's exposure to offices ?
So how have these two stocks performed overall on a per share basis after the drop account of the Covid-19?
You don’t want retail exposure in an online world. WPC is the better pick.
Localinvestor60 profile picture
Disclosure: I'm long WPC and O. They've been a part of my portfolio ever since I retired.
bob_va profile picture
Same here. Great minds think alike!
@bob_vasame for me, but I’m still working.
Khyber Pass profile picture
WPC one of my long-time favorites. Regularly dropping cash into my account.
Now we need to factor in today's announcement of a secondary offering of 4.75 million shares, plus an optional 712,000 shares to the underwriters. If my math is correct, at $70.00 per share.
ijeff profile picture
At least its not diluting current shareholders like some of these offerings do.
@RNArizonathey borrowed at next to nothing without diluting shareholders. Perfect time to do it with cheap money. BTW they had a small increase in dividends in this market. Great management. Buy and hold
jerryki profile picture
Later data: May rent collection WPC = 96%, O = 82%. I think that's a huge difference which overwhelms the other factors in differentiating between these otherwise-similar Reits. Because that's a situation that will probably take many months to improve - may even get worse.
Trapping Value profile picture
Yes that tips the scales for us also in terms of relative preference.
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