Why W. P. Carey Stock Slumped 13.6% in the First Half of 2023
Share prices of W. P. Carey (NYSE: WPC) tumbled 13.6% during the first half of 2023, according to data provided by S&P Global Market Intelligence. That significantly underperformed the S&P 500, which is up 15.9% over the same timeframe.
The continued rise in interest rates weighed on the diversified real estate investment trust (REIT) this year. That offset the positive impact of inflation on its leases and its ability to continue making value-enhancing acquisitions.
The Federal Reserve continued to push the Federal Funds Rate higher this year to help get outsized inflation back under control. Rising rates weigh on REITs because it makes borrowing money to fund development projects and acquisitions more expensive. Meanwhile, higher rates make lower-risk income-producing investments like bank CDs and government bonds more attractive. That reduces demand for REITs, weighing on their share prices and pushing up their dividend yields to higher levels to compensate investors for their higher risk profiles. This dynamic weighed down W. P. Carey's share price, driving its dividend yield up to a recent level of 6.3%.
Source Fool.com
