Real estate income (Nyse: o) is a well -managed net leasing of trust in real estate investment (Reit). This is the 800-pound gorilla in the industry, with a huge portfolio and range that covers North America to Europe. Here is a look why dividend investors such as Realty income and why there is another net leasing Reit, which can be a better choice today.
Realty income owns one -off property where the tenant is responsible for most expenses at the property level. Although every property is at high risk, as there is only one tenant, Reit owns more than 15,600 properties, so the total default risk is quite low. The net leasing contracts it uses reduces operating risk as most operating costs of ownership are paid by the tenant.
This huge property portfolio is also distinguished by its width. It is distributed in North America and Europe and includes both retail and industrial assets, along with some single properties such as casinos, data centers and vineyards. Real estate revenue has many levers to download as it seeks to grow. Add with a 5.8% dividend yield and you can see why dividend investors will be attracted by real estate income.
However, there is one problem: real estate income is a huge company and growth is likely to be slow. For example, in 2025, the company called for corrected operations from operations (FFO), which could reach up to 0.7%. Even at the high end of its assessment, the growth will be modest only 2.2%.
You can do better on the growth front with WP Carey (Nyse: WPC)The second largest net leasing Reit.
This is not understood as a knock against real estate income. The company has achieved a lot and is a reliable dividend with its huge profitability. But it becomes more difficult to grow a company as it increases to scale.
This is only the main mathematics of the situation. The PEER WP Carey market cap is approximately one quarter of the amount of real estate income. But it offers 6.2% dividend yield.
This said that every bit is as diversified as real estate income, having industrial and commercial assets in both North America and Europe. In fact, WP Carey has been investing in Europe for decades before Realty’s income crossing the pond.
The problem with WP Carey is that he reduced his dividend in 2024 after deciding to get out of the struggle of the office sector, so his dividend experience does not seem as good as real estate income. However, after the decrease, WP Carey began to increase the dividend to the quarter again, just as he did before the decrease. In other words, the main repair of the business, although difficult for dividend investors, is made from a position of power, not from weakness.