Comparing Dividend-Focused Stocks: Rexford Industrial versus W.P. Carey
In the world of Wall Street, beauty is often subjective, especially when it comes to comparing two real estate investment trusts (REITs) that focus on industrial assets. Let's delve into W.P. Carey (WPC 0.86%) and Rexford Industrial (REXR 1.79%) to determine which one suits your investment portfolio better.
The Industrial Giant: W.P. Carey
W.P. Carey, a net lease REIT, dishes out most property-level operating costs to its tenants. Although one property can be high-risk due to its singular tenant, the overall risk is low when the portfolio is broad and diverse, which W.P. Carey successfully achieves with 1,430 buildings and 346 tenants, spanning both North America and Europe.
The property type and geographic diversification aren't limited to industrial assets. A substantial portion comes from retail and the "other" category, making up 15% and 22% of rents, respectively. The remaining 64% is dedicated to industrial properties, like warehouses and manufacturing facilities.
When it comes to dividends, W.P. Carey shines with an astounding 6.4% yield due to the 2024 dividend reset. Although the office sector faced substantial challenges since the COVID-19 pandemic, the dividend has shown impressive growth, surpassing expectations by continually rising after the 2023 quarterly reduction.
The Game Changer: Rexford Industrial
For investors seeking faster-paced growth, Rexford Industrial offers an exciting alternative to W.P. Carey. With a dividend yield of 4.3%, it is near its all-time high, suggesting that the stock is currently on sale.
The primary allure of Rexford Industrial is its stellar dividend growth, which has achieved a compound annual rate of 13% over the past decade. Even though W.P. Carey's growth might be sluggish by comparison, Rexford's focus on industrial assets, primarily in Southern California, promises an exciting journey for investors searching for high-growth stocks.
However, the downside of this narrow focus and market exclusivity is elevated risk. Should anything negatively impact the Southern California industrial market, Rexford Industrial's growth might stall.
Concluding the Comparison
When deciding between W.P. Carey and Rexford Industrial, it is vital to consider your unique investment priorities, risk tolerance, and growth expectations.
Conservative investors who value diversification and a more stable dividend stream ought to gravitate toward W.P. Carey's higher yield and diversified industrial portfolio but should bear in mind its relatively short dividend streak.
Investors seeking a more aggressive growth strategy, unbothered by market concentration risks, should explore the opportunities offered by Rexford Industrial's strong dividend growth potential.
Ultimately, the choice boils down to your own financial outlook and risk tolerance.
Investing in either W.P. Carey or Rexford Industrial requires considering their approach to finance and dividends. W.P. Carey's focus on diversification and low risk, as shown by its 1,430 buildings and 336 tenants, results in a high dividend yield of 6.4%. On the other hand, Rexford Industrial offers faster growth with a higher dividend yield near its all-time high and a 13% compound annual growth rate over the past decade, but this comes with a higher market concentration risk.
