Should You Buy W. P. Carey While It's Below $60?

Shares of W. P. Carey (NYSE: WPC) currently sit just below $60. That's well above its low point from the past year (in the low $50s) and not too far from its 52-week high in the mid-$60s. Because of that, investors might be wondering if the stock is still a buy at its current price point.

Here's a look at the real estate investment trust's (REIT's) current value proposition.

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Tearing down and building back up

W. P. Carey recently reported its fourth-quarter and full-year results for 2024, and the diversified REIT had a down year. Its adjusted funds from operations (FFO) slumped 9.3% to $4.70 per share. That decline was largely due to asset sales.

The REIT spent much of the past year exiting the office sector. It spun off a portion of its portfolio to shareholders in late 2023 by forming office REIT Net Lease Office Properties while selling off the remaining properties throughout the year. W. P. Carey also sold some other properties, including a self-storage portfolio, back to the operating tenant. Overall, it sold $1.2 billion of properties last year.

The REIT steadily recycled that capital into new investment opportunities throughout the year. It closed $1.6 billion of deals in 2024 (primarily warehouse, industrial, and retail properties), including a record quarterly volume to end the year at $841.3 million. Those deals helped the REIT get back on a growth trajectory at the end of the year as its adjusted FFO rose 1.7% in the fourth quarter.

W. P. Carey conservatively expects to invest another $1 billion to $1.5 billion into new properties this year. It can fund that level with built-up cash from prior asset sales, post-dividend free cash flow, and additional property sales ($500 million to $1 billion expected this year). Those new investments position the REIT to grow its adjusted FFO to a range of $4.82 to $4.92 per share this year, up more than 3.5% at the midpoint.

If interest rates decline (and the company's stock price continues to rise), the REIT could ramp up its investment volume because it could sell stock and borrow more money to make additional accretive acquisitions. A higher investment volume would drive a faster earnings growth rate.

A look at its value proposition

With its stock price currently below $60 per share, W. P. Carey trades at about 12.3 times its adjusted FFO at the midpoint of its forecast. That's a relatively attractive level, compared to other REITs. For example, the average retail REIT focused on freestanding net-lease properties trades at 13.4x its 2025 FFO estimate, with several trading well above that level, including Agree Realty at 16.3x. Meanwhile, industrial REIT Stag Industrial trades at 13.5x its 2025 FFO forecast.

However, W. P. Carey does trade at a higher valuation compared to some of its more diversified net-lease peers, as Broadstone and Gladstone trade at 11.4x and 10.7x, respectively, though these peers have weaker financial profiles, compared to W. P. Carey.

The REIT's relatively lower valuation is why it currently offers a very attractive dividend yield of 6%. That's higher than Agree Realty (4.3%) and Stag Industrial (4.3%), even though they all have similar dividend payout ratios in the 70%-75% range.

W. P. Carey expects to continue increasing its high-yielding dividend after resetting its payout in late 2023, due to its office exit. It has raised its dividend every quarter since that cut, a trend that seems likely to continue, with dividend growth tied to the rise of its FFO.

An attractive income investment

Shares of W. P. Carey have started to recover from their slump following the REIT's decision to exit the office sector and reset its dividend. However, the stock still trades at a relatively cheaper level than its net-lease peers, which is why it has a higher-yielding dividend than some in the sector. Because of that, it still looks like a buy below $60 a share for those seeking a lucrative and steadily rising income stream.

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Matt DiLallo has positions in Net Lease Office Properties, Stag Industrial, and W.P. Carey. The Motley Fool recommends Stag Industrial. The Motley Fool has a disclosure policy.