Q: What are your thoughts on SGR.UN's recent earnings, during the call management indicated that their rents are well below market rates, which provides upside potential as those rents are renegotiated. The payout ratio is high, however, if rents can be increased the payout ratio would fall. Would you be fine holding it here, or is it time to move on to something with a safer dividend? If so what income stock would you recommend replacing it with?
5i Research Answer:
Adjusted ratio is 99.5%, so certainly we would like to see this come down. But the operating performance has been decent here, and the stock is cheap. We like the 'grocery anchored' portfolio, but its generally small size does add some risks. We would see it as a HOLD as part of a higher-risk income 'basket' of several names. On its own, or with a high weighting, we think it needs to be considered risky. We might add CAR.UN (less risk by far) and DIR.UN to a REIT mix here for some diversification.