Strong renewals boost cash flow

Article Excerpt

RIOCAN REAL ESTATE INVESTMENT TRUST $20 is a buy. The REIT (Toronto symbol REI.UN; Cyclical-Growth Dividend Payer Portfolio, Manufacturing sector; Units outstanding: 300.5 million; Market cap: $6.0 billion; Distribution yield: 5.6%; Dividend Sustainability Rating: Above Average; www.riocan.com) owns all or part of 187 shopping centres and other properties across Canada, including eight under development. Its occupancy rate is 97.5%. With the March 2024 payment, RioCan raised your monthly distribution by 2.8%, to $0.0925 a unit from $0.09. The annual rate of $1.11 yields a high 5.6%. In the past 12 months, the trust paid out 61.5% of its cash flow as distributions, which is within its target payout range of 55% to 65%. RioCan continues to renew expiring leases at higher rates. Its tenant retention rate is also a high 91.6%. As a result, its projected cash flow per unit will probably rise from $1.81 in 2024 to $1.88 in 2025. The units trade at just 10.6 times that 2025 forecast. RioCan is a buy. buy…