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W. P. Carey Stock: Inflation-Proof Your Income Portfolio

Jan. 05, 2022 7:00 AM ETW. P. Carey Inc. (WPC)NETL, O, STOR, VGSIX, VGSLX, VGSNX, VNQ38 Comments


  • The triple net lease space has proven to be one of the top income investments in recent years.
  • However, with inflation soaring and interest rates potentially headed higher, this sector - widely viewed as a bond proxy - is at risk.
  • WPC has the strongest inflation protection in the triple net lease space, making it an exception to the rule and an opportunistic time to invest.
  • Looking for a portfolio of ideas like this one? Members of High Yield Investor get exclusive access to our model portfolio. Learn More »

Inflation written newspaper

CasPhotography/iStock via Getty Images

The triple net lease space (NETL) has proven to be one of the top income investments in recent years, with triple net lease REITs like Realty Income (O) and STORE Capital (

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This article was written by

Samuel Smith profile picture

Samuel Smith is Vice President of Leonberg Capital, he has a diverse background that includes being lead analyst at several highly regarded dividend stock research firms. He is a Professional Engineer and Project Management Professional and holds a B.S. in Civil Engineering & Mathematics from the United States Military Academy at West Point and has a Masters in Engineering.

Samuel leads the investing group High Yield Investor investing group. Samuel teams up with Jussi Askola and Paul R. Drake where they focus on finding the right balance between safety, growth, yield, and value. High Yield Investor offers real-money core, retirement, and international portfolios. The services also features regular trade alert, educational content, and an active chat room of like minded investors. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WPC either through stock ownership, options, or other derivatives. 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 (38)

Samuel Smith profile picture

Thank you for reading! I hope you enjoyed this idea. Let us know if you have any questions.

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If I can help with anything, let me know.
@Samuel Smith - thanks for the thoughtful article. How much do you think the CPI escalators will lift FFO?
Samuel Smith profile picture
@jc4877 it depends where CPI goes from here, obviously, but I would expect them to lift it by a few percentage points on a per-share basis.
Similarly to WPC, NNN and STOR have most rents CPI linked. From the group, only O has almost all rent-bumps fixed.
Samuel, I enjoy reading your articles on SA. You are a very good writer! WPC is a great company IMHO. I bought my current holding at the depth of the Covid plunge around April, 2020, for a great price of about 39.00 with a yield of 12%. As much as I would like to buy more, I have a problem with buying at the current price so I will patiently wait for a drop.
Samuel Smith profile picture
@Phillip French thanks so much for the kind feedback!
The minutes today said over 2 percent by 2024. Your right if this happens and the money supply is decreased? The pain will start.
@boog3 The pain, if any, will dissipate fairly quickly because 2% by 2024 is almost back to historic norms for interest rates. 2% is still really low historically. And a gradual increase of 2% over the next two years is easily absorbed by the market.
jgrever621 profile picture
WAY overweight WPC for exactly these reasons. Also DRIPing, at least until the cost rises to 83, which is my current buy below price.

Good article. Enjoyed reading your article as usual.
Pablo profile picture
Waiting for a good price. A couple-three months and it will be WPC buy time, March-April most likely.
I’m with you on WPC, one of my largest REIT holdings. Looking forward to watching their 2022 acquisition activity, as they continue to grow, especially their industrial portfolio.

Thanks for the article.
The FED is drying up the money supply and raising rates. That to lower inflation. That is the over all threat to the market. Interest rates are at zero. They were about a half percent before the pandemic. Anything can happen. End of year should be interesting. My opinion. Thanks for the article. I own and likeWPC.
@boog3 The Fed has only announced that it is slowing its money printing. This after M1 has gone from 4 trillion in Feb 2020 to 20 trillion now. They've screwed us and will not harmlessly get that genie back in the bottle.
Samuel Smith profile picture
@boog3 you're welcome. The Fed cannot do too much in terms of raising interest rates without crashing the economy and breaking the federal budget.
@boog3 WPC can borrow money in Europe at rates next to nothing and spend it on properties globally somewhere rates are much higher. It is a fantastic business model.
It Is All About The Timing profile picture
Dividend growth sitting at 1.37%. Not so great at keeping up with inflation.
By_Endurance_We_Conquer profile picture
@It Is All About The Timing

I read and hear that argument very often.

However, I do not understand it. I mean: You invest $1000 and WPC pays you around 5.2% via the dividend yield. Usually, that beats inflation and keeps your original investment intact.

Normally, dividend payers with low yields (below inflation) raise the dividend above inflation. And dividend payers with high yields (above inflation) raise the dividend below inflation.

What you want is the best of both worlds: high yield with high raise (above inflation).

IMHO you are expecting too much!
cureman55 profile picture
@It Is All About The Timing Maybe too slow dividend growth for you but my largest holding allows me to sleep well at night.
marshbound profile picture
@It Is All About The Timing That's an historical growth rate - inflation has only recently jumped sharply so few contracts have hit their rate reset intervals yet. Sure, rate increases will lag the increase in inflation, but they'll lag the decreases later too, a good thing for investors. In the long run should all wash out.
Income4ever aka Cyclenut profile picture
WPC is an income investor must have core holding just like O. Period
PB Investment profile picture
Good yield, but a bit overpriced. I would buy if yield becomes > 5,50%.
However, there is basically no dividend growth.
@PBInvestment There have been nine consecutive years of dividend growth during the last nine years, including the past two years of quarterly dividend increases during the global pandemic. And a track record over the past 23 years of dividend payments without any decreases even during the Great Recession. Pretty good dividend record and steady growth for the past nine years..
PB Investment profile picture
@wysockiman DGR of the last 8 years has been ~3,2%.
DGR of the last 10 years has been ~6,7% (thanks to a bump 9 years ago, otherwise it would have been definitely less).
They are both good.
But if you look at the last 3 and 5 years (with COVID) the DGR has been of ~0,9% and ~1,3%, respectively.
If you look at the DGR from 2014 to 2019 (last 5 years before COVID), the DGR has been of ~2,9%.
It's a good stock and a solid dividend. But for these reasons, I would target at least a 5,50% yield. Of course, it depends on your goals. Just stating the facts above :)
Income4ever aka Cyclenut profile picture
Agree that DG is minimal last 5 years but they will achieve the prestigious goal & honor of becoming dividend aristocrat next year.
They are also in the process of unwinding their private fund and once completed as expected later in 2022 that should be a catalyst for more robust dividend growth.
You make a credible "bull" case for investing in WPC. Thanks for the coverage, Samuel.
Duras profile picture
Samuel, nice clear cut article. You have a habit of writing about companies I've begun circling, thank you, much appreciated.
Samuel Smith profile picture
@Duras great to hear! Thanks for the kind feedback.
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