In his contribution piece for The Motley Fool Canada
, market analyst Jacob Donnelly noted that the REIT’s 46 million square feet in 303 shopping centres house high-quality tenants such as Wal-Mart, Cineplex, and Canadian Tire.
“Unlike a small retail operation that may not be able to compete with an internet juggernaut, these companies are more than capable of keeping pace. RioCan doesn’t need to worry about its tenants going out of business,” Donnelly wrote.
Another factor that makes RioCan a sensible investment is its revenue, which has garnered much optimism from tenants.
“According to its first-quarter earnings, RioCan renewed one million square feet at an average $1.05 per square foot increase in rent, or 6.2%,” Donnelly said.
“Its occupancy also increased to 94.8% in March 2016 from the 93.1% in June 2015. While it might not seem significant, even small basis-point movements can have a serious impact on earnings,” the analyst added.
RioCan returns remain incredibly promising, especially since there are no signs of the growth stopping any time soon.
“In the first quarter it had $148 million in operating funds from operation, which was up 10%, or 7% from the first quarter in 2015,” Donnelly explained.
“All of this leads to the real reason why investors buy this stock: the dividend. The company currently pays $0.1175 per month to investors, which is a yield of 4.94%. I expect that this dividend will continue to grow as the company takes the $1.2 billion it earned and pays down debt and invests it into better properties,” he concluded.
“For those who want income and growth, RioCan is the place to be.”
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Would-be investors who are looking for a reliable venture to park their assets into might consider RioCan Real Estate Investment Trust, a Canadian shopping mall REIT that an observer argued is one of the best existing today.