Why I Just Bought This 5.2% Dividend Stock for Passive Income and Plan to Buy Even More Stocks Throughout 2025

• WP Carey’s diversified portfolio produces very stable and consistent rental income.

• The REIT’s conservative financial profile allows it to grow its portfolio.

• Those growth drivers should allow the REIT to continue increasing its dividend.

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I want to be financially independent. My investment strategy is simple: its goal is to build reliable sources of passive income that can eventually cover my basic living expenses. To execute this plan, I regularly invest in income-producing assets, such as high-yield stocks that pay dividends.

This approach recently led me to buy more shares of W.P. Carey (NYSE: WPC)a company that I firmly believe aligns with my passive income goals. Here’s why WP Carey is an integral part of my dividend income strategy.

WP Carey is a real estate investment trust (REIT). It owns a well-diversified portfolio of high-quality, operationally critical commercial real estate in North America and Europe. The company primarily invests in industrial, warehouse, retail and other single-tenant properties secured by long-term net leases with built-in rent escalations. Those net leases provide the owner with very stable rental income because the tenants cover all of the property’s operating costs. Meanwhile, built-in escalations increase rents at a fixed or inflation-linked rate, giving you a steady increase in income.

The REIT expects to produce between $4.87 and $4.95 per share of adjusted funds from operations (FFO) this year. That’s more than enough to cover its dividend, which is currently up to $3.64 per share each year. With its stock price recently below $70 per share, WP Carey has a dividend yield of 5.2%. I can generate $5.20 of annual dividend income for every $100 I invest in the REIT at that rate.

WP Carey’s stable cash flow and conservative payout ratio kept its high-yielding dividend on solid footing.

WP Carey stands out from other net lease REITs due to its focus on investing in properties with built-in rent escalation clauses that primarily tie rents to inflation (50% of its leases). High levels of inflation in recent years have helped drive income growth faster. WP Carey’s same-store base rents have grown at an annual rate of 2% to 4% in recent years. That provides a good base growth rate to support dividend increases.

Acquisitions are the REIT’s other main growth driver. WP Carey uses a combination of free cash flow from dividends, new debt, equity issuances and sales of non-core assets to fund new investments. The REIT currently expects to invest between $1.4 billion and $1.8 billion this year. It had already secured $1.3 billion of new investments as of early September, primarily single-tenant industrial properties in North America. These properties are currently the most attractive new investments you can make due to their combination of cap rates, lease terms, and rent escalations.