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W. P. Carey Enhances Shareholder Value
WPC HST PKY
In consistence with its efforts to boost stockholders’ return, real estate investment trust (REIT)
W. P. Carey Inc. ( WPC - Snapshot Report) hiked its quarterly cash dividend by 1.2% sequentially to 87 cents per share. Further, owing to the distribution of its 2013 taxable income to shareholders, the company announced a fourth quarter special dividend of 11 cents per share. Earlier, the company had declared a special dividend of 30 cents in Dec 2009.
Both the dividends will be paid on Jan 15, 2014 to shareholders of record as of Dec 31, 2013. W. P. Carey has consistently paid dividends and its current payout marks the 51st consecutive quarterly dividend to shareholders. Dividends & REITs
Solid dividend payouts are arguably the biggest attraction for REIT investors as the U.S. law requires these companies to distribute 90% of their annual taxable income to shareholders.
W. P. Carey has a record of increasing its quarterly dividend from time to time since 2000, which reflects the company’s long-term strategy to provide attractive risk-adjusted returns to stockholders. Even during the financial crisis when many REITs slashed their dividend or discontinued the payment, the company not only continued with its payout but managed to increase it as well.
Notably, the announced quarterly dividend at this REIT equates to an annualized rate of common stock dividend of $3.48 per share, resulting in a yield of 5.7% based on its closing price on Dec 13. Our Take
Given its strong and flexible balance sheet, as well as favorable funds from operations (FFO) payout ratio, W. P. Carey has adequate room to increase its dividend rate going forward. Moreover, as of Sep 30, 2013, the company had cash and cash equivalents worth $93.6 million. We believe that the company has adequate cash to provide optimum shareholder value.
The company primarily invests in commercial properties that are generally leased to corporate tenants. On Dec 5, the company acquired a Class A office building for around $40 million that will be leased to TW Telecom Holdings Inc., a subsidiary of TW Telecom Inc. for 15 years, starting from early 2015.
Apart from W. P. Carey, some other REITs have increased their dividends in recent times. In Sep 2013, Host Hotels & Resorts Inc. ( HST - Analyst Report) made a sequential raise of 9.1% in its quarterly cash dividend to 12 cents per share while Parkway Properties Inc. ( PKY - Snapshot Report) hiked its quarterly cash dividend by 25% sequentially to 18.75 cents per share in Nov 2013.
W. P. Carey currently carries a Zacks Rank #3 (Hold).