Weak Q2! Is the fast-aristocrat WP Carey dividend still safe ?!


The US REIT share W. P. Carey (WKN: A1J5SB) announced a further increase in the dividend just a few weeks ago. The dividend payout per share increased only from $ 1.04 to $ 1.042 compared to the previous quarter. But at least: This is a small indicator that the world is actually in order.

However, WP Carey has now presented rather weak figures for the second quarter as part of the reporting season. This in turn leads to a question: is the dividend of the fast aristocrat still secure? A question that we want to get to the bottom of in the following.

The numbers at a glance!

As WP Carey had to admit now, the corona virus has left some traces in the numbers. This is in turn due to slightly lower rental income rates. But, a little hint: A catastrophe has yet to materialize. Especially considering the current exceptional situation

At any rate, revenue fell moderately by $ 291 million in the year-ago quarter to $ 283.6 million. In contrast, net income attributable to shareholders was $ 105.3 million. After $ 66 million a year earlier. A value that can be safely put aside. After all, the most important factors for the success of the Real Estate Investment Trust are the funds from operations.

This was approximately $ 191.8 million for the quarter, compared to $ 183.2 million in the prior year. However, and this should also be considered: In the previous quarter, WP Carey had FFO, the short form, of $ 239.7 million. A rather mixed quarter overall.

However, and that too needs to be remembered for the moment: WP Carey received $ 1.10 per fund from operations. That is still enough to cover the dividend. For the moment, therefore, it means: Yes, the dividend is still sustainable. And safe for the moment.

Investors have to watch that now!

It should be borne in mind that WP Carey is experiencing an exceptional situation. As the US REIT itself announced in the context of rental income rates, the values ​​fluctuated between 94 and 99% in the last quarter and depending on the sector. This shows that the corona virus has passed the property relatively harmlessly. However, also that some tenants still could not pay.

Investors should therefore watch how this situation develops. In principle, it could be that, over time, there are other tenants who may no longer be able to pay. Finally, the real estate industry is likely to be hit with a slight time lag. Some may not want to admit that they are in existential problems.

However, and this must also be taken into account: there could be a few tenants who normalize and catch up again. Failed rents can be paid back, which in turn could lead to higher funds from operations in the third or fourth quarter.

It is important for the moment: The dividend is stable, secure and has been increased again. At a current share price of $ 71.37 (July 31, 2020, which is decisive for all prices), the share comes to a price-FFO ratio of 16.2 compared to this quarterly FFO. A fundamentally still rather moderate starting point.

That’s it?

So the question that is actually relevant at WP Carey is: Was that it? Is this the low point in times of the corona virus? If so, the effects are not bad. If not, there is still a safety buffer for the dividend. Especially since I could imagine that the management sometimes pays individual quarters out of the substance or the FFO of the previous quarter.

For me, therefore, the conclusion remains: Yes, the dividend from fast aristocrat WP Carey is now still secure.

The post weak Q2! Is the fast-aristocrat WP Carey dividend still safe ?! appeared first on The Motley Fool Germany.

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Vincent owns shares in WP Carey. The Motley Fool does not own any of the stocks mentioned.

Motley Fool Deutschland 2020


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