Topics Dividend Stocks

RioCan $27.54 - Toronto symbol REI.UN

RIOCAN REAL ESTATE INVESTMENT TRUST $27.54 (Toronto symbol REI.UN; Units outstanding: 324.7 million; Market cap: $9.0 billion; TSINetwork Rating: Average; Dividend yield: 5.1%; www.riocan.com) is Canada’s largest real estate investment trust.

For the three months ended June 30, 2016, cash flow per share was $118.0 million, or $0.37 a share. That’s up 8.1% from $109.2, or $0.34 a share, a year earlier.

The trust continues to acquire high-quality properties across Canada—since September 2015 it has spent $1.1 billion. This includes taking 100% ownership of four properties in B.C., Alberta and Ontario by buying out its joint venture partner, the Canadian Pension Plan Investment Board.

RioCan can well afford these purchases. In May 2016 it completed the sale of its U.S. properties for $1.2 billion. Their value has risen with the U.S. dollar and the country’s recovering economy.

Those recent sales and purchases are part of the trust’s plan to focus on Canada’s six largest markets: Toronto, Montreal, Ottawa, Calgary, Edmonton and Vancouver. These markets now account for 75.7% of its rental revenue.

RioCan trades at 18.2 times its forecast 2016 cash flow of $1.51 a unit. That’s reasonable in light of the REIT’s highly profitable properties and its 95.1% occupancy rate. The units yield 5.1%.

RioCan is a buy.

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Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

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What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

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