Uncovering Hidden Gems: Two Overlooked Dividend Stocks with Promising Yields
The stock market may be soaring, but savvy investors know that the best opportunities often lie in overlooked corners. Two dividend-paying stocks, W.P. Carey and Royalty Pharma, have been unfairly punished, offering investors a chance to scoop up high yields and reliable dividend growth at discounted prices.
A Real Estate Investment Trust with a Proven Track Record
W.P. Carey, a real estate investment trust (REIT), has been trading at a 35% discount to its 2022 high watermark. This presents a unique opportunity to snag a 6.2% yield. The REIT’s recent struggles stemmed from the spinoff of 59 office buildings into Net Lease Office Properties, which led to an adjusted dividend payout. However, with its problematic office buildings now off its books, W.P. Carey boasts an impressive 98.8% occupancy rate.
The REIT’s business model is built on long-term net leases, which transfer variable costs to tenants and feature annual rent escalators. This has enabled W.P. Carey to increase its dividend payout for 24 consecutive years before the spinoff. Since then, the REIT has lifted its dividend payout three times, with more growth expected in 2025. With a geographically diversified portfolio of 1,430 single-tenant buildings across Europe and North America, W.P. Carey offers a dependable source of income.
Royalty Pharma: A Specialty Financier with a Blockbuster Track Record
Royalty Pharma, a specialty financier, lends money to drugmakers in exchange for a royalty stake in their new products. This unique business model has yielded a remarkable track record, with stakes in 15 blockbuster drugs generating over $1 billion in annual sales. At recent prices, the stock offers a 3.2% yield.
Since its public debut in 2020, Royalty Pharma has raised its dividend four times, resulting in a 40% increase. With $10.1 billion in transactions announced since 2022, many of which have yet to produce significant royalties, investors can expect substantial earnings growth in the years ahead. As the largest provider of royalty financing, Royalty Pharma is poised to capitalize on the industry’s growing need for capital, with start-up drugmakers requiring over $1 trillion in funding over the next decade.
Don’t Miss Out on These Exceptional Dividend Stocks
Both W.P. Carey and Royalty Pharma offer income-seeking investors a chance to secure high yields and reliable dividend growth at discounted prices. While they may not be the fastest-growing dividend stocks, they possess the dependability and potential for long-term success that make them attractive additions to a diversified portfolio.
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