I love REITS another sector I love (Basically reits and the financial sector are my two best known sectors, my favorite in the space NRZ. They recently raised their divy to .38 a quarter from .35. My guess is business is doing real good. Core EPS has went from like the .35 then to .40, and now last quarter was .43. I think it is deserving of a 10 PE. I also wouldn't be surprised to see further improvement in core eps to say .45-.50 this quarter. I expect continued growth with the ability to continue to raise the divy for years to come as long as they grow more first and conservatively raised the divy slowly,as core eps grows first.
My four rules on REITS.
1) Must not pay out more then they earn. That is a red flag, because at some point that divy will be cut. I don't want to be their when it happens.
2) Trade at a respectable time FFO (funds flow from operations (essentially the way a reit calculates it earnings (adds back depreciation essentially (non cash expense), which depending on growth is 12 or less for me is the multiple I use.
3) Must have not cut their divy in the last 2 years at least. You go in my penality box when you do that
4) Must pay a 5% plus divy yield.
My Current REITS I own FWIW: ACR-UN.TO (ACRVF), APTS, BTB-UN.TO (BTBIF), CSG, FSP, HOT-UN.TO (AHOTF), IRT, LXP, MPW, NRZ, And SELF. As you can see I threw money around a basket of these types of stocks. All is just my opinion, and I could always be wrong though.
AI
