Portfolio diversity shields investors

Article Excerpt

In general, we’re wary of REITs that derive a large portion of their revenue from a single tenant or industry. That’s why we advised you to steer clear of Choice Properties REIT when its parent company Loblaw (and major tenant) set it up as separate company in 2013. However, we changed our view on Choice following its 2018 merger with Canadian REIT—one of our long-time recommendations. The combined company is now Canada’s largest REIT, with a much more attractive mix of retail, industrial, office and residential tenants. That portfolio diversity gives it a solid platform to pay investors reliable distributions. Those payments still look secure during the current COVID-19 outbreak, as Loblaw and other food sellers still supply the majority of rental revenues. We’re also optimistic about Choice’s new developments, which set investors up for future gains. CHOICE PROPERTIES REIT $13 is a still top pick for 2020. As Canada’s biggest REIT (Toronto symbol CHP.UN; Cyclical-Growth Payer Portfolio; Manufacturing sector; Units o/s: 700.4 million; Market cap:…