2023 balance sheet and 2024 outlook: W.P. Carey dividend stock with turnaround potential and attractive returns.

2023 balance sheet and 2024 outlook: W.P. Carey dividend stock with turnaround potential and attractive returns.

According to a report by www.aktienwelt360.de, the W. P. Carey company looks back on an eventful year in 2023, in which it cut its dividend and sold its office properties. This led to a decline in sales and an adjustment to the dividend.

Since W. P. Carey's office real estate accounted for around 16% of sales revenue, management felt compelled to reduce the dividend to $0.86 in the quarter. Today, however, the question is much more: What will the new stock market year 2024 bring?!

In my opinion, the focus at W. P. Carey should concentrate more on the value proposition and at the same time the actually solid starting position. Now that we know how much dividend there is, the turnaround started easily. Nevertheless, as income investors, even if we buy today we will receive a dividend yield of around 5.2%. The price-FFO ratio at the current price level would be approximately 14 (after the sale and according to the lowest forecast of $4.60 for 2024).

That looks comparatively cheap. At W. P. Carey we don't yet know the numbers for the fourth quarter. However, I believe that these figures could also deepen the turnaround. Based on the lowest forecast for funds from operations per share of $4.60, this could result in a value of approximately $1.15 per share. In any case, there would be potential for surprise. It will also be interesting to see how the payout ratio develops based on this value.

At the same time, the market could have something to offer. W. P. Carey reacted very sensitively to the increased interest rates in 2023. Current market forecasts assume that we will probably see falling key interest rates again in 2024. This may further fuel the dividend stock's turnaround. Refinancing future liabilities would become cheaper, and the FFO and dividend yields of many REITs look significantly more attractive again in view of falling key interest rates.

W. P. Carey is and remains a quality REIT. With fewer office properties, the vacancy rate is likely to remain very low, recently hovering around 1%. In terms of balance sheet, the US REIT has net debt of $8.3 billion and more than $9 billion in equity. This is also a perspective that could increasingly become a promise of returns due to falling interest rates.

Admittedly, I wouldn't necessarily expect growth in the new stock market year 2024. Presumably it's initially about the turnaround. However, we should not forget that more quality and a better operational foundation can also be the basis for moderate growth in the coming years.

W. P. Carey gradually purchases additional properties. Even in 2023, $1.3 billion to $1.5 billion flowed into new properties that better fit the REIT's portfolio. All of this and long-term rising rents through clever rental agreements can lead to growth. With a price-FFO ratio of 14 and a dividend yield of more than 5%, that seems quite attractive to me. Especially if we consider that operational growth can also lead to dividend growth in the long term. Although I wouldn't necessarily expect that we will see increasing distributions again in the new stock market year. However, that would be another possible surprise.