I had a little bit of extra cash in my checking account at the end of 2025. I plan to transfer that money to my brokerage account and use some of it to boost my passive income in the new year.
The first stock I plan to buy is W.P. Carey (WPC +0.45%). Here's why I want to make the high-yielding real estate investment trust (REIT) my first passive income investment in the new year.
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A very bankable dividend
W.P. Carey is one of the largest REITs focused on investing in net lease real estate. Net leases produce very stable rental income because tenants cover all property operating expenses, including routine maintenance, real estate taxes, and building insurance. W.P. Carey focuses on investing in operationally critical real estate, primarily single-tenant industrial, warehouse, and retail properties in the U.S. and Europe, secured by long-term net leases (its portfolio currently has a 12.1-year weighted average lease term) that include built-in rent escalations. Its same-store annual base rent grew at a 2.4% annual rate during the third quarter.
The REIT expects to generate between $4.93 and $4.99 per share of adjusted funds from operations (FFO) in 2025. This level easily supports W.P. Carey's current annualized dividend rate of $3.68 per share, enabling it to retain cash for funding new income-generating investments. At its recent share price, W.P. Carey's dividend yields 5.7%, well above the S&P 500's 1.1% average.
The landlord further fortifies its financial profile with a strong balance sheet. W.P. Carey has a solid investment-grade credit rating backed by a leverage ratio that's within its target range in the mid-to-high fives (5.8 times at the end of the third quarter). The REIT also routinely sells non-core properties to recycle capital into higher-returning new investments. It was on track to close between $1.3 billion and $1.5 billion of sales in 2025.
W.P. Carey's combination of stable cash flow, conservative dividend payout ratio, and rock-solid balance sheet provides a solid foundation for its high-yielding dividend.
NYSE: WPC
Key Data Points
Built for growth
W.P. Carey has multiple growth drivers. The company's built-in lease escalation clauses enable it to deliver sector-leading same-store rent growth. Meanwhile, its strong financial profile provides it with ample financial flexibility to expand its portfolio via sale-leaseback transactions, property acquisitions, and build-to-suit projects.
The company was on track to invest between $1.8 billion and $2.1 billion in 2025. It had secured $1.6 billion of new investments when it reported its third-quarter financial results in late October, including five capital investments and commitments totaling $67.1 million that the company expected to complete by the end of 2025. Along with rent growth, these investments had W.P. Carey on track to grow its adjusted FFO per share by 4.9%-6.2% in 2025. That growing income enabled the REIT to increase its dividend payment every quarter by a total of 4.5% over the past year.
W.P. Carey is in a strong position to continue growing in 2026. It should benefit from its portfolio's sector-leading rent growth, a strong near-term deal pipeline, and ample access to capital. The company has already secured six capital investments and commitments totaling $181 million that it expects to complete by the first quarter of 2027.
Meanwhile, the company has a large property pool that it can continue to monetize to fund new investments. It has been selling off its portfolio of operated self-storage properties to invest in higher-returning net lease real estate. W.P. Carey sold 37 self-storage operating properties for $513.3 million through the end of October. It had another 42 operating self-storage properties remaining that it could sell. Additionally, the REIT has other non-core investments it can monetize, including a stake in cold storage REIT Lineage Logistics.
A bankable and growing income stream
W.P. Carey's high-yielding dividend is on a rock-solid foundation. The REIT is also in a strong position to grow its portfolio, earnings, and high-yielding payout in 2026 and beyond, thanks to its built-in rent growth and financial flexibility. The company's combination of a low-risk, high-yield dividend and visible growth potential is why I plan to make W.P. Carey my first passive income investment in the new year.
