The first quarter of earnings reports following the Trump administration's new taxes on imported goods have mostly been announced already. So far, the only thing we can say for certain is that the tariffs are going to sting. Exactly how much they'll hurt is still anybody's guess.
If an unpredictable trade war has you feeling queasy about the overall stock market, consider adding shares of Realty Income (O -1.21%) and W.P. Carey (WPC -0.62%) to your portfolio.
These stocks are offering yields above 5% at recent prices, plus they raise those payouts every quarter like clockwork. Here's how buying them now and holding for the long run could lead to heaps of passive income once you're ready to retire.
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Realty Income
Realty Income is a real estate investment trust (REIT). That means it can avoid paying income taxes by distributing nearly all its profits to shareholders as a dividend. It's also a proponent of net leases that transfer all the variable costs of building ownership to the tenant.
On Aug. 15, Realty Income paid a monthly dividend for the 661st month in a row. Since becoming a publicly traded company in 1994, the company has raised that ultrareliable payout 131 times.
It might be hard to imagine that a stock with such a reliable track record could sink, but that's what happened. The stock is down about 29% from the all-time high it set in early 2020, when interest rates were still extremely low.
Now that investors can receive a risk-free yield of about 4.4% from Treasuries, they aren't as interested in reliable dividend stocks like Realty Income. At recent prices, shares of the REIT offer an unusually large 5.7% yield. That's heaps more than the 1.2% yield you would receive from the average dividend-paying stock in the benchmark S&P 500 index.
Investors can reasonably expect this REIT's dividend payout to continue growing in the quarters and years ahead. In 2025, management expects adjusted funds from operations (FFO), a proxy for earnings used to evaluate REITs, to land in a range between $4.22 and $4.28 per share. That's significantly more than it needs to meet a dividend commitment currently set at an annualized $3.228 per share.
At the end of March, Realty Income's commercial property portfolio contained 15,627 buildings spread across resilient categories like grocery stores and convenience stores. The company's three largest tenants are 7-Eleven, Dollar General, and Walgreens.
With its top three tenants responsible for just 10% of annualized rent, credit rating agencies adore Realty Income. In June, the company sold 1.3 billion worth of unsecured, euro-denominated notes that don't mature for about eight years at a yield of just 3.7% on average. With access to ultracheap capital, Realty Income can continue generating a strong profit while offering competitive terms to prized tenants that seem likely to meet their long-term lease commitments.
W.P. Carey
W.P. Carey is another net lease REIT with a large and diverse tenant base. Unlike Realty Income, W.P. Carey has a blemished dividend-raising track record. In 2023, the company lowered its dividend payout by 19.6% to compensate for the spinoff of its underperforming office building portfolio.
W.P. Carey has already raised its dividend payout six times since spinning off its office building portfolio. At recent prices, the stock offers a juicy 5.5% yield and a strong chance to see much more in the years ahead.
With 178 million square feet of leasable space, W.P. Carey's property portfolio is a little more than half the size of Realty Income's. The company is growing its portfolio rapidly enough that it might catch up to its bigger peer in another decade or two. From the beginning of 2025 through July 29, W.P. Carey invested $1.1 billion into new properties and properties it's developing.
At the midpoint of management's guided range, adjusted FFO is expected to rise 4.5% this year to $4.91 per share. That is heaps more than it needs to meet a dividend commitment currently set at an annualized $3.60 per share.
W.P. Carey's portfolio isn't as large as Realty Income's, but it is more diversified. Its three largest tenants are responsible for just 7.1% of annualized base rent.
At the end of the second quarter, W.P. Carey could boast 98.2% occupancy, which isn't unusual. The REIT hasn't finished a year with an occupancy rate below 98% since 2011. With a well-occupied and well-diversified portfolio, we can reasonably look forward to steady dividend raises in the years ahead. For most investors, buying some shares now to hold over the long run could be a smart move.
