Best Stock to Buy Right Now: Realty Income vs. W.P. Carey

If you are looking at buying stock in Realty Income (NYSE: O), you should probably also be considering competitor W.P. Carey (NYSE: WPC). There are a number of reasons for this, from their net-lease business models to their dividends. Here's a look at some key differences and similarities between these two real estate investment trusts (REITs).

How are Realty Income and W.P. Carey similar?

To start, Realty Income and W.P. Carey do very (very!) similar things. They both own single-tenant properties leased using net leases, which require tenants to pay for most property-level expenses.

They both have exposure to retail, warehouse, and industrial assets, with each dipping their toes into unique, one-off properties. They both have portfolios with exposure to North America and Europe.

And both have very long histories. W.P. Carey actually helped to popularize the net lease concept before it was a public entity.

Image source: Getty Images.

In many ways, the two net lease REITs are kind of interchangeable. In fact, they even have similar dividend yields, with Realty Income at 5.6% and W.P. Carey offering just a bit more than 5.6%. But no two companies are exactly the same.

How are Realty Income and W.P. Carey different?

Realty Income, for instance, is a fairly large company with a roughly $50 billion market cap. W.P. Carey's market cap is a little under $14 billion. That said, the latter is the second-largest net lease REIT. Realty Income just happens to be an industry giant. That extends to the respective portfolios, with Realty Income owning over 15,600 properties and W.P. Carey "just" 1,600 properties or so.

That difference requires a bit more clarification, however, because W.P. Carey is more heavily tilted toward industrial and warehouse assets, which tend to be larger. Realty Income's focus is more on retail properties, which tend to be smaller.

In some ways, their portfolios are actually somewhat complementary to each other. It wouldn't be a bad plan to own both of these industry-leading net lease REITs.

However, there's another big difference that might bother some dividend investors. Realty Income has increased its payout annually for 30 consecutive years. W.P. Carey reset its dividend lower in late 2023 after making the decision to exit the office sector, a move Realty Income made a few years earlier (without a dividend cut). Another difference is that Realty Income pays out its dividend monthly, while W.P. Carey pays on a quarterly basis.

W.P. Carey quickly restarted increasing its dividend every quarter, as it was doing prior to the dividend reduction, but its streak still falls well short of Realty Income's.

That said, Realty Income is so large that it requires massive investments each year to grow. That shows up in the dividend, which it pays monthly, but increases quarterly, as well. But the last increase was a tiny 0.2% or so (2.3% annualized).

W.P. Carey's smaller size allows it to grow more quickly, with its most recent quarterly dividend increase amounting to roughly 1.1% (3.5% annualized). For investors who want a combination of yield and dividend growth, W.P. Carey probably comes out on top here.

Think safety versus risk when you consider Realty Income and W.P. Carey

In the end, Realty Income is something of a slow-moving industry giant. It has a strong foundation, but it isn't going to excite you. W.P. Carey is smaller and more aggressive, leading to faster growth.

Given the similar yields, Realty Income will probably interest more conservative types while W.P. Carey will attract more aggressive income investors. Or, as noted, you could buy them both, which might give you the best of both worlds.

Should you invest $1,000 in Realty Income right now?

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Reuben Gregg Brewer has positions in Realty Income and W.P. Carey. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.