Extendicare Inc (EXE.TO)

They are a leader in Canada, used to be in the US but pulled back. He bought it but it pulled back. He is getting a good return from the coupons. He thinks this one can double. They have more debt than he would like to see but the payout ratio is reasonable. It is in a good demographic area. They are growing organically and through takeovers.

They have been paying out too much in dividends so the book value has been slipping. It looks like the company is rolling over. The fair market value is 13% under where it is trading. He sees more downside than upside.

Sadly, REITs do not do well in rising rates due to them being a bond proxy. He would be a seller of the recent REIT rally in general. They have weakening earnings and no revenue growth. He would be a seller.

Pays a decent dividend, but not loads of growth. You'll see 2-4% earnings growth. Also, this is interest-rate sensitive. Over 10 years, their chart has been sideways, and the next five years will likely be like the past five.

He likes Extendicare. They haven’t been doing well but they pay a good dividend every month. Their debt is too high but they are a leader in the Canadian field. This is a demographic play on an aging population. They recently took over some homes in Whitby. He is happy to hold this while it pays a dividend. It might take a few years before it rises but it could then double.

They are mainly long-term care facilities, compared to Chartwell which is mainly retirement homes. The long-term care is very regulated and very low margin. There aren’t many ways to grow this business. You can try to add new services (if the regulators will let you) or add retirement homes. Growth is constrained. The homes are aging and need capital. You should look at this like a bond replacement. It doesn’t have the same flexibility or upside as retirement homes.

He owns this one and sees its value in real estate assets. It has come back to trend line support, he says, and sees $8.16 as key support. Resistance would be around $9.50, he thinks. For now, hang on to it. Yield 5.5%.

He’s getting a 5.5% dividend with a 73% payout ratio. They have good cash flow but a higher debt load than he likes. He thinks that their troubles in the United States are behind them. (Analysts’ price target is 9.67$)

Extendicare Inc. (EXE-T) vs Chartwell(CSH.UN-T) He favours Chartwell over Extendicare, because they became overextended in the US market and have litigation issues. Whereas Chartwell has re-focused their plan quicker.

This has been dropping, but doesn't know who has been selling. This pays $.04 a month in dividends. The payout ratio is pretty reasonable compared to what it used to be. He’s happy to hold it. It’s a bit like clipping coupons. This is a huge demographic play. The population is getting older, and there is going to be more demand for their services.

There is only coverage from a couple of firms. He is not sure what caused the August drop. (Analysts’ target: $9.67).

This has been a disappointing company over the long term. The company has recently refocused only on Canadian nursing homes. Forward EV to EBITDA is 11.5X.

(A Top Pick Oct 28/16. Up 6%.) It had been up much, much higher, but he still likes the name. This is in a really good space for the long-term. Has good support.

He bought this 4 years ago at $7.01 and it is now $9.44. One reason he bought it was for the dividend as it was over 7%. Thinks this could go to $15. It’s a leader in the field and a wonderful demographic play. They’ve been growing by acquiring and organically.

(A Top Pick Sept 28/16. Up 1%.) Earnings were very reasonable, but the market is very “fair weather” these days. There are lots of places on the chart where buyers would come back in again.