Money Should Investors Buy This 10% Yield Now?

20:25  16 april  2017
20:25  16 april  2017 Source:   fool.com

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Therefore, investors should focus on adding fantastic companies with long-term prospects rather than chasing high yields . Motley Fool CEO Tom Gardner Goes Live and Tells Hong Kong Investors To Buy This Canadian Darling Tech Stock…

The hunt for high- yield stocks continues, even after the Federal Reserve boosted interest rates again this week. While the prime rate keeps edging higher, bonds are taking their sweet time catching up in yield . Source: 401(K) 2012 via Flickr. Besides, you want to stay away from bonds, anyway.

thinking 16-9 © Provided by Fool thinking 16-9

As Foolish investors know, exposure to the real estate industry is needed in every portfolio. It’s a proven wealth builder, and many REITs provide steady dividend yields to investors.

However, the dividend yields can range significantly; some REITs produce yields above 10%. With the stock market providing annual average returns in the range of 8-10%, can investors obtain superior returns by having a stock that pays out 10% with a chance of capital appreciation?

Cominar REIT (TSX:CUF.UN) is a REIT that’s a part of the 10% yield club; however, does it belong in your portfolio?

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Investors seem to be disappointed in the announcement, as shares have sold off a bit to , down by approximately 5%. I break down the recent news and give my thoughts on the stock, which now yields close to 7%. I explain why I recently bought more Enterprise.

We reveal the UK's top 10 rental hotspots for landlords. Liverpool and Nottingham are now the Top ten buy -to-let hotspots by rental yield . Ranking in Jan 2018. Location. Why have stock markets fallen and what should investors do? Take a look at the brand new Jaguar I-Pace prototype.

Here’s a closer look at the company.

Management’s focus

The company owns and operates over 500 commercial properties throughout Canada with over $8.3 billion in assets. In 2016, management made efforts to reduce the company’s debt levels after significant acquisitions in 2014. The company achieved this goal by bringing its debt ratio to 0.52, which is close to its debt ratio of 0.51 in 2013.

Now management is shifting its focus to improving its occupancy rates and financial results. The company currently has an occupancy rate of 92.4% which is significantly lower than some of the other large REITs in the market. However, this also indicates that there is room for improvement regarding the company’s current cash flows.

Is the yield safe?

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  This High-Yield Trio Could Be Your Ticket to a Secure Retirement Brookfield Property Partners LP (TSX:BPY.UN)(NYSE:BPY), Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP), and Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) offer high yields and healthy growth.These boring assets produce a beautiful income stream

Succesfull investors know that small cap stocks have historically outperformed the market. Dividend investors should consider these 10 high- yield The limited partnership's stock price has fallen about 50% on the year, which has driven up the dividend yield -- and created a potential buying opportunity.

Current price level does not constitute an attractive entry point into the stock. Income investors pay a premium for a mortgage REIT with a 100 percent core earnings payout ratio. Annaly Capital Management does not have a compelling reward-to-risk ratio today.

Although the company hasn’t cut its dividend in the past seven years, the company’s payout ratio is now above 100%. In addition, the funds from operations per share have started to decline since the company’s expansion in 2014. Therefore, unless Cominar can increase its occupancy rates, it may struggle to service its dividend yield in the future.

Foolish bottom line

Until Cominar can improve its cash flows and increase its occupancy rates, I would suggest refraining from adding this stock to your portfolio. A high dividend yield is not a shortcut to accelerating returns, and investors are better off investing in companies with more conservative yields and potential for growth.

Building wealth takes time and patience, and there are no shortcuts. Therefore, investors should focus on adding fantastic companies with long-term prospects rather than chasing high yields.

My Top 3 Long Plays for Long-Term Investors

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Discover High Growth Stocks. 10 Best Stocks Right Now . Here's what investors should know about this ETF and why you might want to consider it. Who should invest in it? In a nutshell, the Vanguard High Dividend Yield ETF is a good investment for people who

But investors should at the least get a double-digit yield on cost over the next 12 months — and with a couple of breaks, some solid price appreciation as well. The 6 Most Inexpensive Growth Stocks to Buy Now . Trade of the Day: Netflix, Inc. May Be Heading Lower Yet.

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Fool contributor Colin Beck has no position in any stocks mentioned.

Why I’m Skipping This Succulent 10% Yield .
Cominar REIT (TSX:CUF.UN) offers one of the best dividends around. There's just one problem: I'm not convinced it can maintain the payout.CVX

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