Two Outstanding Dividend Shares Nearing 52-Week Low Points, Purchasing Which on Price Drops Might Result in Future Regret
Investment opportunities abound, even as headline indexes continue their upward march. Two often-overlooked dividend players, W.P. Carey (WPC -1.64%) and Royalty Pharma (RPRX 12.56%), have seen their share prices plummet to 52-week lows. However, these price drops present an excellent opportunity for diversity in a well-rounded portfolio.
W.P. Carey
As a real estate investment trust (REIT), W.P. Carey has been trading for about 35% below its 2022 high watermark. But at these recent prices, you stand to gain a generous 6.2% yield.
Slight falls in its stock price can be attributed to its decision to divest 59 buildings into Net Lease Office Properties in late 2023. With the burden of problematic office buildings now off its plate, W.P. Carey reports a staggering 98.8% occupancy rate.
Instead of managing properties, W.P. Carey employs a unique strategy. Tenants sign net leases, transferring all costs related to building ownership to them. With long-term leases featuring annual rent escalators, the REIT was able to boost its dividend payout continuously for 24 years – until its recent Net Lease Office Property spinoff.
After the spinoff, W.P. Carey raised its payouts three times, and expectations are high that they'll grow again in 2025. Financial projections suggest adjusted funds from operations (FFO) per share will be between $4.65 and $4.71 this year, well surpassing its existing dividend obligation of $3.50.
What sets W.P. Carey apart is its strategic portfolio. With 1,430 single-tenant buildings across Europe and North America, this geographical diversity will yield steadily increasing payouts in the long run, making it a dependable addition to your income-seeking portfolio.
Royalty Pharma
Rising prescription drug expenses are a reliable trend, and individual drug launches might be unpredictable, but that doesn't stop income investors from reaping the benefits of Royalty Pharma. At current prices, it offers a meager 3.2% yield.
This specialist financier lends capital to pharmaceutical companies in exchange for a stake in their new – or sometimes experimental – drug products. Royalty Pharma has 15 blockbuster drugs that produce over one billion dollars in annual sales.
Royalty Pharma's journey as a publicly traded company began in 2020, forging ahead to raise its dividend four times over a 2-year period – totaling a 40% increase. Investors can anticipate significant further dividend leaps in the coming years.
Since 2022, Royalty Pharma has completed transactions amounting to $10.1 billion. Many of these investments have yet to generate substantial royalties.
However, Royalty Pharma excels over a decade-long horizon. With the biopharma industry requiring over $1 trillion in capital over the next ten years, Royalty Pharma—the sector's largest provider of royalty financing—will benefit from an abundance of potential borrowers.
Investors may expect a great deal of earnings growth from Royalty Pharma, but its significance lies in the long run.
Given its current 52-week low, investing in W.P. Carey could yield a generous 6.2% return, making it an attractive opportunity for those seeking income in their finance portfolios.
Royalty Pharma, with its 15 blockbuster drugs that generate over one billion dollars in annual sales, offers a meager 3.2% yield at present, but its potential for significant dividend growth in the long run, coupled with the biopharma industry's need for capital, makes it an intriguing investment for income-seekers and growth investors alike.
