riocan

RIOCAN REAL ESTATE INVESTMENT TRUST $25.78 (Toronto symbol REI.UN; Units outstanding: 318.8 million; Market cap: $8.1 billion; TSINetwork Rating: Average; Dividend yield: 5.5%; www.riocan.com) is Canada’s largest real estate investment trust.

In the three months ended June 30, 2015, RioCan’s revenue rose 6.3%, to $322.3 million from $303.2 million a year earlier. Cash flow per unit gained 2.4%, to $0.42 from $0.41.

The trust has now agreed to unwind its 50/50 joint venture with U.S.-based Kimco Realty. This business manages 35 malls across Canada.

...

With growing real estate portfolios in key Canadian markets, we view RioCan and Allied Properties REITs as strong dividend stocks.

RIOCAN REAL ESTATE INVESTMENT TRUST $25.78 (Toronto symbol REI.UN; Units outstanding: 318.8 million; Market cap: $8.1 billion; TSINetwork Rating: Average; Dividend yield: 5.5%; www.riocan.com) is Canada’s largest real estate investment trust. In the three months ended June 30, 2015, RioCan’s revenue rose 6.3%, to $322.3 million from $303.2 million a year earlier. Cash flow per unit gained 2.4%, to $0.42 from $0.41. The trust has now agreed to unwind its 50/50 joint venture with U.S.-based Kimco Realty. This business manages 35 malls across Canada....

SUNCOR ENERGY INC., $35.07, Toronto symbol SU, has agreed to buy an additional 10.0% of the Fort Hills oil sands project in northern Alberta from France’s Total S.A. Following the purchase, Suncor will own 50.8% of Fort Hills, while Total will hold 29.2%. Teck Resources (see below) will continue to own the remaining 20.0%. Owning a majority interest will make it easier for Suncor to cut costs and make other changes in response to low crude prices....

H&R REIT builds with takeovers, Canadian REIT builds from within, and we like both for their strong dividend yields and sound prospects.

RIOCAN REAL ESTATE INVESTMENT TRUST $26 (Toronto symbol REI.UN; Aggressive Growth Portfolio, Manufacturing & Industry sector; Units outstanding: 318.3 million; Market cap: $8.3 billion; Price-to-sales ratio: 6.5; Dividend yield: 5.4%; TSINetwork Rating: Average; www.riocan.com) has found new tenants for seven of the 26 former Target stores in its malls. It will have to remodel the remaining 19, but it expects to lease them all within the next two years.

Target’s U.S. parent company guaranteed the leases on the Canadian stores, but it has not yet paid RioCan the lost rental payments. If RioCan is unable to find new tenants, Target may have to pay the trust up to $250 million.

RioCan is a buy.

...

ISHARES CDN REIT SECTOR INDEX FUND $15.79 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index.

iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 5.1%.

The ETF’s largest holding is RioCan REIT at 20.1%, followed by H&R REIT (14.6%), Smart REIT (7.9%), Canadian Apartment Properties REIT (7.9%), Canadian REIT (7.3%), Allied Properties REIT (6.7%), Cominar REIT (6.5%), Dream Office REIT (6.1%), Boardwalk REIT (5.3%), Granite REIT (4.5%), Artis REIT (4.3%), Dream Global REIT (2.5%), Crombie REIT (2.3%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.6%).

...

POTASH CORP. OF SASKATCHEWAN $34 (Toronto symbol POT; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 834.7 million; Market cap: $28.4 billion; Price-to-sales ratio: 4.5; Dividend yield: 5.8%; TSINetwork Rating: Average; www.potashcorp.com) has offered to buy leading German fertilizer producer K+S AG for around $8.6 billion U.S. K+S has rejected the offer, as it feels the price discounts the potential value of its new Legacy potash mine in Saskatchewan, which will open in 2016. As a result, K+S has indicated that Potash Corp. would have to raise its bid by roughly 22%. In response, Potash Corp. may launch a hostile takeover offer. However, German regulators would probably block an acquisition, particularly if Potash Corp. plans to close some of K+S’s mines. Potash Corp. is still a hold....

BCE INC., $54.14, Toronto symbol BCE, continues to see strong demand for its wireless, high-speed Internet and Fibe TV services. In the three months ended June 30, 2015, the company’s earnings rose 14.8%, to $735 million from $640 million a year earlier. Per-share profits gained just 6.1%, to $0.87 from $0.82, on more shares outstanding. These figures exclude unusual items, such as costs to integrate BCE’s November 2014 purchase of the 56% of Bell Aliant it didn’t already own. On that basis, the latest earnings matched the consensus estimate....

ISHARES CDN REIT SECTOR INDEX FUND $15.79 (Toronto symbol XRE; buy or sell through brokers; ca.ishares.com) holds the 15 Canadian real estate investment trusts in the S&P/TSX Capped REIT Index. iShares CDN REIT’s expenses are 0.60% of its assets. The fund yields 5.1%. The ETF’s largest holding is RioCan REIT at 20.1%, followed by H&R REIT (14.6%), Smart REIT (7.9%), Canadian Apartment Properties REIT (7.9%), Canadian REIT (7.3%), Allied Properties REIT (6.7%), Cominar REIT (6.5%), Dream Office REIT (6.1%), Boardwalk REIT (5.3%), Granite REIT (4.5%), Artis REIT (4.3%), Dream Global REIT (2.5%), Crombie REIT (2.3%), Pure Industrial REIT (2.1%) and Northern Property REIT (1.6%)....