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3 reasons the stock is still a buy

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More money in retirement

W. P. Carey (NASDAQ:TSFT) has been a bit disappointed with its first dividend hike this year. Management of the real estate investment trust only increased pay per share by 0.2 US cents quarter over quarter. Previously at 0.3 US cents, there has been hope for slightly stronger growth.

Be that as it may: with a current dividend yield of over 5.3%, the REIT stock may still be attractive. But let’s take a look at three other reasons why foolish income investors should keep these dividend stocks on their watch lists.

WP Carey: built-in inflation protection

For the most part, WP Carey has built-in inflation protection. The annual rent adjustments are part of the Real Estate Investment Trust and the contracts. Or are they on a fixed basis, more recently fixed annual growth rates were, for example, 2.3% pa ​​But there is also another model that is now more promising.

WP Carey management has inflation protection on approximately half of its leases by adjusting rent increases to reflect inflation. There are also some brakes here. However, it is possible to at least partially offset inflation through raises and achieve growth.

This property alone, with over 1,200 properties across the board, leads to a defensive base that can definitely be interesting for dumb investors in the current market environment. Also when it comes to inflation.

Price to FFO ratio of 15.8

WP Carey is currently valued at a dividend yield of over 5%. But the price/FFO ratio also reflects a cheap base. Based on the current stock price of $79.70 and funds from operations per share of $5.03, that figure is currently 15.8.

However, it is possible that the value will decrease even more. In the fourth quarter, funds from operations per share were $1.30. If this value continues, the price-FFO ratio will drop to 15.3, which is even cheaper.

Therefore, WP Carey has a moderate overall rating. With the prospect of growth through inflation hedging or acquisitions, this can be the foundation for strong returns over longer periods of time. Real estate itself is also considered a store of value.

WP Carey: Steady Passive Income

There has been no qualitative growth in dividends. However, WP Carey has quality with its own dividend. The management pays out US$1,057 to investors, with a dividend yield of 5.3%, a high passive income attracts. In addition, the pay per share has not been reduced once since the company’s IPO in 1998.

The payout rate of 81.3% also shows that there is a sustainable base. Therefore, WP Carey can offer income investors many long-term advantages, despite the lack of dividend growth at the moment.

The article WP Carey Disappointed With Dividend Hike: 3 Reasons The Stock Is Still A Buy appeared first in The Motley Fool Germany.

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Vincent owns shares of WP Carey. The Motley Fool does not own any of the shares mentioned.

Motley Fool Germany 2022

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