Real estate manager a promising income stock in 2017

by Ephraim Vecina19 Apr 2017
A leading Canadian REIT is shaping up to be a reliable income stock this year, which should prove useful to investors who are looking to augment their revenue.

In a recent piece for The Motley Fool Canada, markets observer Joseph Solitro recommended Morguard Real Estate Investment Trust (TSX:MRT.UN), as it is currently one of the largest owners and managers of commercial real estate nationwide.

As of the end of 2016, the REIT’s portfolio amounted to a total of around 8.72 million square feet of gross leasable area in 49 properties, comprised of 21 retail properties and 28 office/industrial properties spread across six provinces.

“Morguard pays a monthly distribution of $0.08 per unit, equal to $0.96 per unit on an annualized basis, and this gives it a yield of about 6.1% today,” Solitro wrote. “In its fiscal year ended on December 31, 2016, its AFFO totaled $1.26 per unit, and its distributions totaled just $0.96 per unit, resulting in a very conservative 76.2% payout ratio.”

“In addition to being a high and safe yielder, Morguard should be viewed as one of the most reliable income providers in the real estate industry, because it has paid monthly distributions uninterrupted and without reduction since January 2005 and maintained its current monthly rate since March 2012,” Solitro added.

The analyst concluded that given all these facts, Morguard will prove to be a dependable addition to one’s portfolio.

“I think its consistently ample AFFO generation, including $1.28 per unit in 2014, $1.28 per unit in 2015, and $1.26 per unit in 2016, and its consistently conservative payout ratio, including 75% in 2014, 75% in 2015, and 76.2% in 2016, will allow it to continue to maintain its current monthly distribution rate for the foreseeable future.”

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