Invest in Two Straightforward Dividend Shares with a $500 Budget Immediately
Seeking stocks with generous yields without breaking the bank? The real estate investment trust (REIT) sector is a goldmine for such investments. REITs are obligated to distribute at least 90% of their taxable income as dividends to shareholders, resulting in high yield payouts. In this article, we delve into two REITs with appealing yield, moderate share prices, and solid fundamentals: W.P. Carey (WPC 0.86%) and EPR Properties (EPR 2.54%).
1. W.P. Carey
Most REITs specialize in a single real estate category. W.P. Carey distinguishes itself by pursuing diversification, ensuring no single category dominates its portfolio comprising 1,430 properties. The various segments include industrial (35%), warehouse (28%), retail (22%), and "other" (15%). The REIT's geographical spread also adds to its diversity.
Historically, W.P. Carey had a robust presence in office properties. The smart move to hive off this segment into a separate company, Net Lease Office Properties, was strategic given the category's slump during the coronavirus pandemic and its ongoing volatility.
The decision to divide the company led to a 20% reduction in the vaunted dividend in September 2023. While this was a challenging period for W.P. Carey, its performance in the most recent quarter displays resilience. Revenue surged to nearly $398 million, up by 2% from the previous quarter, while adjusted funds from operations (AFFO) increased by 1% to $259 million.
W.P. Carey's dividend is yet to return to its earlier levels but has witnessed four consecutive upgrades since the reduction, reaching $0.88 per share. The REIT's long-term prospects look promising, with analysts projecting a 7% revenue rise this year.
2. EPR Properties
Although EPR Properties is less diversified than W.P. Carey, its unique portfolio boasts "experiential" properties such as movie theaters, fitness facilities, amusement parks, and educational facilities, including private schools and early childhood education centers.
Like W.P. Carey, EPR Properties faced a challenging period following the pandemic. The REIT suspended its dividend for over a year, reinstating it at a reduced rate of $0.25 per share in July 2021.
However, EPR Properties has shown remarkable resilience in its recovery. Revenue has surged since its 2021 peak, reaching nearly $706 million in 2023, surpassing the pre-pandemic level. Meanwhile, AFFO has grown by 8% in the former year.
EPR Properties' stock currently yields over 7%, making it an attractive option for income-focused investors.
Enrichment Data:
W.P. Carey (WPC):- Current dividend yield: 6.36%- Recent financial performance: annual dividend of $3.52 per share, dividend payout ratio of 138.58% based on trailing year earnings, 78.40% based on this year's estimates, and 75.86% based on next year's estimates.- Portfolio performance: pays a yield ratio on AFFO around 75%, with ambitious growth in its portfolio and new senior notes at low interest rates in Q4.
EPR Properties (EPR):- Current dividend yield: 7.42%- Recent financial performance: annual dividend of $3.42 per share, dividend payout ratio of 138.65%.- Portfolio performance: consistently increases its dividends for 4 consecutive years, with a shareholder yield that includes indicators for dividends, buybacks, and debt paydown.
- With a current dividend yield of 6.36%, W.P. Carey's robust financial performance continues to attract investors looking for high returns on their investments in the finance sector.
- Investors seeking for income in the finance space might find EPR Properties appealing, offering a high yield of 7.42%, despite facing challenges during the pandemic, and showing a consistent dividend increase for the past four years.
