Spin Master Corp’s (TSX:TOY) 10% pullback in the last five days due to the bad press from Hatchimal complaints could be a long-term buying opportunity. After all, the children’s entertainment company is not a one-trick pony; it has a diverse portfolio of products. Further, it has passionate and capable management. It has won multiple awards across different product categories and has made successful acquisitions.
If you want safe monthly income, add Canadian Apartment Properties REIT (TSX:CAR.UN) to your watch list. You can sleep well at night holding the quality units.
Why is it a high-quality REIT? What’s a good valuation (i.e. price range) to buy its units to prevent overpaying and to boost your starting yield? First, let’s see if it’s the kind of business you want to own.
Canadian Apartment Properties REIT Overview
- Market cap: $4.1 billion
- Price: $29.60 per unit
- Yield: 4.2%
- Payout ratio: 72%
Canadian Apartment Properties REIT started out with 2,900 residential suites in 1997 when it had its IPO. Since then, it has grown to a portfolio of about 48,514 suites.
Source: CAPREIT Q2 2016 Presentation – Slide 7
Canadian Apartment Properties REIT is most notable for its assets from the stable Ontario province, which makes up half of its portfolio. Its assets in Ontario, Quebec and British Columbia all maintain high occupancies.
In total, the three provinces make up 83% of the REIT’s portfolio and adds stability to its financial performance. As a result, the REIT’s portfolio occupancy was 98.2% as of the end of June 2016.
Source: CAPREIT Q2 2016 Presentation – Slide 23
The top three provinces from where the company earns the highest net operating income (NOI) margins are British Columbia (an NOI margin of 68.8%), Ontario (60.4%), and Alberta (60.4%).
What first brought my attention to Stella-Jones Inc. (TSX:SJ) was its dividend growth history. Yes, it only yields 0.9% today, but Stella-Jones has consistently increased its dividend per share at a double-digit rate for the last decade.
So, it wouldn’t come as a surprise that it has been outperforming the market.
Stella-Jones’s stable business beats the market
Stella-Jones has been outperforming the market. In the last 10 years, its annualized returns were over 27% while the S&P 500’s annualized returns were 6.3%.
More impressively, since 2005 when it started paying a growing dividend, the Stella-Jones stock has appreciated 2,800% — a 29-bagger! That is, a $1,000 investment would have turned into $29,000, excluding the dividend paid. In fact, the 2.5% yield in 2005 would have turned into a yield on cost of 21% by 2016! Read More