High-quality tenants set these REITs apart

Article Excerpt

While the Omicron variant could lead to more lockdowns, Choice Properties and RioCan’s high-quality tenants should continue to support their current distributions. CHOICE PROPERTIES REIT $15 is a buy. Canada’s biggest REIT (Toronto symbol CHP.UN; Cyclical-Growth Payer Portfolio; Manufacturing & Industry sector; Units outstanding: 723.3 million; Market cap: $10.8 billion; Distribution yield: 4.9%; Dividend Sustainability Rating: Above Average; www.choicereit.ca) owns 718 retail, industrial, office space, and residential properties. Investors also benefit from its high 97.0% occupancy rate. George Weston Ltd. (Toronto symbol WN) owns 61.7% of the trust. Choice pays a monthly $0.061667 distribution. The annual rate of $0.74 yields a high 4.9%. The payout ratio was a sustainable 87.1% of its cash flow in the latest quarter. Essential retailers such as supermarkets and drugstores contribute over 80% of Choice’s rents. That includes Loblaw (Toronto symbol L), which accounts for 55.3% of its rental revenue. Loblaw is also controlled by George Weston. Choice’s revenue in the third quarter of 2021 rose 2.3%, to $316.1 million from $309.0 million…