Better Buy: W.P. Carey or Four Corners?
W.P. Carey (NYSE: WPC) helped popularize the net-lease approach that Four Corners Property Trust (NYSE: FCPT) is using today. They are, however, very different real estate investment trusts (REITs) in some important ways. And in this case the higher yield will probably be more attractive to conservative dividend investors.
Both W.P. Carey and Four Corners are net-lease REITs. That means that the REITs own properties that they lease out to single tenants. Those tenants are responsible for most of a property's operating costs. Although any one property is a high risk, since there's only a single tenant, across a large portfolio the risk is fairly low. And without the need to worry about things like taxes and maintenance, net-lease REITs can afford to pay out generous dividends.
Four Corners' business model is the easier of the two REITs to explain. It looks to buy retail properties with a heavy emphasis on restaurants, and owns around 1,000 properties across the U.S. W.P. Carey, on the other hand, has no specific sector focus, per se. It purposely spreads its bets around in order to create a diversified portfolio. It currently owns more than 1,400 properties in the industrial (27%), warehouse (24%), office (17%), retail (17%), and self storage (5%) sectors. A fairly large "other" category brings things to 100%. On top of that, W.P. Carey also generates a bit more than a third of its rents from outside the U.S., mostly from Europe. So it is diversified by both geography and property type.
Source Fool.com
