Killam Apartment REIT (TSX:KMP.UN) is a reliable choice for investors who are looking to dip into the apartment sector this year, according to a Motley Fool Canada analysis earlier this month.
With a particular focus on developing and managing apartments mostly in Atlantic Canada, Killam owns over $1.9 billion in high-quality assets—making it “a very solid holding for income investors that may be looking to increase the average yields of their portfolios,” markets observer Joey Frenette wrote.
“The dividend currently yields a bountiful 4.75% and is expected to grow by leaps and bounds over the long term,” Frenette added. “The fundamentals of the company are quite strong. A majority of the earnings come from Nova Scotia
and New Brunswick, which account for approximately 43% and 22% of the company’s net operating income, respectively,”
Another point in Killam’s favor is its long-term plan to ensure steady cash flow over the next few years.
“There are currently $59 million in development projects until 2018. A part of the free cash flow generated from these new projects will go into the development of even more projects, but a majority of it will go right into the pockets of shareholders in the form of an increased dividend,” Frenette explained.
“The management team is focused on growing the dividend, and I believe the company is a less-risky play than some of the other Canadian REITs that have a considerable amount of exposure to the Vancouver’s and Toronto’s housing markets, which many pundits believe are in bubble territory.”