Choosing Between Realty Income and W.P. Carey: A Guide to the Best Net Lease REIT

Realty Income and W.P. Carey are top net lease REITs with similarities, but also have notable differences. Realty Income has a focus on retail properties and a 30-year dividend streak, while W.P. Carey has a focus on industrial assets and a reset dividend after exiting the office sector. Both offer diversified portfolios and high dividend yields, with Realty Income offering a 5.6% yield and W.P. Carey offering a 5.8% yield.

Realty Income and W.P. Carey are two prominent players in the net lease real estate investment trust (REIT) sector, each with its unique focus and dividend history. This article explores the similarities and differences between these two REITs, providing investors with a comprehensive overview to make informed decisions.

Business Models and Portfolios

Both Realty Income and W.P. Carey operate under the net lease model, where tenants are responsible for most property-level expenses. This model allows these REITs to benefit from long-term leases and regular rent bumps. Geographically, both REITs have a diversified portfolio across North America and Europe, with a mix of retail, warehouse, and industrial assets. However, there are notable differences in their asset focus. Realty Income concentrates on retail properties, with retail assets making up around 75% of its rent roll. In contrast, W.P. Carey is more focused on industrial assets, with industrial rents accounting for approximately two-thirds of its total rent [1].

Dividend Yields and Streaks

Both REITs offer attractive dividend yields. Realty Income boasts a 5.6% yield, while W.P. Carey offers a slightly higher yield of 5.8%. These yields are significantly higher than the S&P 500 index's 1.3% and the average REIT yield of around 4.1% [1].

The dividend histories of these REITs also differ. Realty Income has maintained a 30-year streak of annual dividend increases, with a consecutive 110-quarter increase. W.P. Carey, on the other hand, had a 24-year streak of annual increases, which was reset in late 2023 due to the exit from the troubled office sector. Despite this reset, W.P. Carey has since resumed its quarterly dividend increases, indicating a strong long-term outlook [1].

Risk and Growth Prospects

For investors seeking a low-risk, dividend-focused investment, Realty Income may be the better choice due to its long-standing dividend streak. However, those willing to accept a bit of uncertainty might find W.P. Carey more attractive, given its higher yield and the potential for stronger growth prospects in the industrial sector [1].

Investment Considerations

Before investing, consider the current stock market conditions and the Motley Fool's analysis. While Realty Income was not included in their latest top 10 stock picks, it remains a solid choice for dividend investors. Conversely, W.P. Carey offers a high yield and a compelling turnaround story, making it an attractive option for those seeking growth potential [2].

Conclusion

Realty Income and W.P. Carey are both strong contenders in the net lease REIT sector, each with its unique advantages. Realty Income's focus on retail assets and its impressive dividend streak make it an attractive choice for conservative investors. Meanwhile, W.P. Carey's higher yield and potential for growth in the industrial sector offer a compelling alternative. Investors should consider their risk tolerance and investment goals when deciding between these two top-performing REITs.

References

[1] https://www.theglobeandmail.com/investing/markets/stocks/O-N/pressreleases/33521960/best-stock-to-buy-right-now-realty-income-vs-w-p-carey/
[2] https://www.fool.com/investing/2025/07/21/3-no-brainer-high-yield-stocks-to-buy-with-500-rig/