I finally accumulated enough cash to make a purchase in my Dividend Empire portfolio after a bit of a drought. Besides my small monthly buys in Loyal3 it has been just over a month since I added TROW to this portfolio.
I narrowed down my watch list to just two stocks for this purchase – W.P. Carey (WPC) and Foot Locker (FL). It was a really tough choice. I actually had a limit order for FL set at $62. I almost got filled last Monday when the stock dipped to $62.35, but it has since run up to $65. This led me to take a closer look at WPC.
Many bloggers in the dividend growth community have been jumping on WPC lately and it’s easy to see why. It’s hard to ignore the recent (and drastic) drop in stock price that has pushed the dividend yield to over 6%. And with WPC’s fundamentals remaining the same or even improving over this time period the stock is clearly on sale.
Dividend Mantra wrote up a nice analysis of WPC when he first initiated his position and has also provided an update on WPC recently after adding to his position. DM covered WPC very well so I won’t bother writing up the analysis that I performed. I will just highlight some key points and detail my purchase.
- WPC is a REIT that provides international exposure
- WPC is diversified across 25 industries that use their properties
- Analysts expect earnings to grow 7.7% annually over next 5 years
- WPC has increased their dividend annually for 18 consecutive years
- The 5-year dividend growth rate is 14%
- Current yield is just over 6%
WPC dividend growth has accelerated over the past 5 years and I’m not sure if the 14% average increase will be sustainable. But even if we assume 10% average growth I can expect a yield on cost of almost 10% in 5 years! A 5% average dividend increase? That would put me at a 7.8% yield on cost in 5 years. I like those numbers…
WPC Purchase Details
- Sector: Financials
- Industry: REIT – Diversified
- Purchase date: 6/19/2015
- Portfolio: Dividend Empire Portfolio
- Shares purchased: 19
- Cost per share: $62.4799
- Commissions: $4.95
- Cost basis: $1192.07
- Yield on cost: 6.08%
- Forward income: $72.50
My new WPC position adds $72.50 of annual income to my portfolio, bringing the total up to $656.73. This purchase also provides a nice boost to my overall portfolio yield on cost, which increased from 3.34% to 3.51%.
WPC also filled in a gap in my portfolio diversification since I was in need of a REIT. As a bonus I get some international exposure as well.
My Dividend Empire portfolio has been updated to reflect the addition of 19 shares of WPC.
Has anyone else purchased WPC lately? Is everyone still buying up REITs?