Artis Real Estate Investment Trust (AX.UN.TO)

This gets you into a large Calgary exposure. This REIT has recognized that and has been expanding aggressively into the US. There are also conversations that they will be selling some of their Calgary office. If you have a very long time horizon, and you like the yield, it might be worth waiting through. 8.7% yield.

Primarily centres around Western Canada and excess office supply. Office supply in Canada is going to increase by about 3% during the next 5 years accumulatively. A lot of that office is in Toronto and Calgary, which means you are going to see above average vacancy during the next several years, which will pressure central business District rents for a lot of the new office spaces, and consequently put a bit of a downward pressure on suburban office rents, which tend to be some of the stuff this company owns. Trading at a substantial discount to NAV. He owns a little of this, but is cautious because the payout ratio is relatively high. Dividend yield of 8.8%.

(A Top Pick April 5/16. Up 37.7%.) (Preferred Shares.) He had an opportunity last year in the rate reset market as people were selling preferred shares off in fear of rates going to zero. Still feels there is upside. Thinks they will call this in 2018 and you still get the 6% yield. If they don’t call it, then you will get reset into a yield that is higher than what you are getting paid now.

A well-managed company, largely based in Western Canada. Real estate, particularly commercial real estate, in Western Canada has not done as well. That may come back as the energy market comes back, but this is an interest sensitive stock, and if the market feels rates will rise over the next year, which he thinks is the case, REITs generally will underperform. However, this one looks pretty cheap.

It is a name that has been challenging because of the western Canada exposure. They are divesting out of some of Western Canada and going into the US. He’d hang on to it. The payout ratio is about 90% but he does not think things can get worse in western Canada. They are focused on more suburban markets.

This has been beaten up a lot. It is currently trading at about $11.70, and its asset value is closer to $15. Payout ratio is going to hover between 90% and 95%. It is challenged by vacancies in Western Canada. Management is trying to reposition the portfolio, and exit out of some of the space they have in Western Canada, and redeploy that into the US. In the meantime, you are going to be able to get your dividend and doesn’t think it will get cut. Dividend yield is north of 9%.

A high yield can be seducing. This is a balanced company, and is a good high-yield pick. Pick one or 2 of the Top Picks, and then add a little bit of the higher yielders. Just don’t put all your money into one high-yield. Accept lower yields in higher-quality names that are trading cheap.

He owns a little. A good, deep value name for Canadian investors looking for a mid-single digit yield as the payout ratio is under 100%. The concern is not if rates are going to go up and affect their cash flow growth, it really has to do with lower commodity prices in Western Canada. They just did an equity issue to buy some US assets, and there is a little bit of an overhang there. Good value and decent yield.

A diversified story. You are getting a bit of Calgary office, some good Western Canadian retail, some solid US office. A large liquid name and the yield is very attractive. Valuation is reasonable. He doesn’t expect a lot of appreciation.

(Market Call Minute.) Sold his holdings recently. It has good US exposure, but they have a bigger Calgary portfolio than almost anybody out there.

Not the highest quality REIT, but he does like it here. 8% dividend yield and it is trading at a very reasonable valuation, 10.7X 2016. Payout ratio is at about 87%, and he sees that declining next year. 32% of its revenue stream is from the US. His problem is that it doesn’t have any growth rate over the next couple of years, due to the areas they are in.

Most REITs have done quite well, but he does not see that here. It is not performing as well as its peer group, which usually means something is wrong. Dividend yield of 7.9%.

Artis REIT (AX.UN-T) or Crombie REIT (CRR.UN-T)? Likes Crombie as a good place to start adding, which he is doing right now. He likes the food side and their attachment to Sobey’s. On this one he is wondering at what point he starts to enter again.

He has a couple of accounts that do own this. It is a good long-term bet. Dividend yield of 8%.

A stock with a lot of Alberta exposure, but also has a strong US portfolio. Thinks the market will continue to punish Alberta names for some time. However, the income is safe and they have managed quite well through the different cycles.