3 Key Reasons to Buy This 2.8% Dividend Yielder Today

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With interests in almost 51,000 residential units predominantly in and around urban centres in Canada, Canadian Apartment Properties REIT (TSX:CAR.UN) is well positioned to continue to benefit from growth in urban centres and upward pressure on rental rates and occupancy levels.

Canadian Apartment Properties just reported first-quarter 2019 results, and it was consistent with all the good stuff that we have come to expect from this REIT, further solidifying my positive thesis on the stock.

Here are the three key reasons to buy this dividend stock.

Operating revenue growth

Operating revenue grew 8% to $181.5 million in the quarter, as occupancy remained strong and stable at 98.7%, net average monthly rents continued to increase (up 3.7%), and margins continued to strengthen.

Consequently, net operating income grew 10.8%, funds from operations increased 17.3%, and funds from operations per unit increased 6.7%.

European expansion going well

Canadian Apartment Properties owns approximately 83% of “ERES,” and as the REIT attempts to create a Europe-focused multi-residential REIT, with properties in the Netherlands, Ireland, Germany, and Belgium, we will see benefits of this expansion in its scale and scope.

In the first quarter, revenues increased 7.3% in the region, with Ireland posting strong recurring revenues of $1.96 million and fees that were up 29%.

Recall that 2018 results were already proving the value of this diversification out of Canada, with rapidly rising occupancy levels from 94.8% to 97.9% in 2018 and a 13% increase in net average monthly rents.

Strong financial position

All this is backed by a strong financial position, proving to investors a level of safety that is invaluable.

The REIT’s dividend yield is currently 2.8%, with a payout ratio of 68.5%, a 1.75 times debt service ratio, and a 3.46 times interest coverage ratio. With ample liquidity of $142 million from the REIT’s credit facilities.

Finally, the April 2019 $345.1 million equity offering was well received by the market, and the stock is trading 11.5% higher year to date and only 5% lower than March highs.

Final thoughts

The REIT’s investment qualities are highlighted in two simple statements that reflect its quality and safety:

The bulk of the REIT’s net operating income comes from properties in Ontario (51% of net operating income), where occupancy has been stable in the last year at 99.4%, and net average monthly rents has been increasing and is up 5% in the last year.

The REIT’s objective is to provide unitholders with long-term, stable, and predictable monthly cash distributions, while growing distributable income and unit value through active management of its properties, accretive acquisitions, and strong financial management.

With Canadian Apartment Properties, you’ll get steady income and long-term gains.

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Third potential white knight investor for Hyflux makes non-binding letter of intent for overseas assets

Debt-laden water treatment firm and genco Hyflux has received yet another non-binding letter of intent from its third potential white knight investor, which has yet to be named.

The company revealed the development in a Singapore Exchange announcement yesterday afternoon (15 May), during which it indicated that the potential new investor is the one of the top 10 largest desalination companies in the world.

Hyflux added that the investor is “a specialist in the engineering, construction, operation and maintenance of water treatment facilities, in particular water desalination plants, with a focus on build-own-operate-transfer, management of concessions and related services”, according to The Straits Times.

The investor aims to acquire Hyflux’s assets in Algeria and Oman, as well as the operation and maintenance of said assets.

The proposed deal will be subject to “regulatory clearance, due diligence and the execution of a binding agreement, with terms to be mutually agreed”, ST reported.

Hyflux acknowledged that the investor is “conscious of the timeline and has indicated that it would be willing to devote all necessary resources to ensure that the due diligence process and the consummation of the deal is carried out in the shortest possible time frame.”

Previously, Hyflux had received non-binding letters of intent from international multi-strategy investment fund Oyster Bay Fund and Emirati utilities group Utico.

The Business Times reported Hyflux as saying on Fri (10 May) that Oyster Bay Fund has expressed its intention to buy preference and ordinary shares in HyfluxShop Holdings, Hyflux’s consumer water business and partially-owned subsidiary, from the company for up to S$26mil.

Hyflux told BT that it “envisions” almost S$500mil worth of investment from Oyster Bay Fund “subject to regulatory clearance, due diligence and the execution of a definitive agreement”.

In a Singapore Exchange filing on Tue (14 May), Hyflux also explained that the draft term sheet it has received from Utico is to be regarded as binding, as stated by Utico’s advisers.

“To avoid doubt, the company has not accepted or entered into the binding term sheet. (Its) advisers are in active discussions with Utico’s advisers to finalise the proposed terms of Utico’s investment,” said Hyflux.

A previous report by Reuters indicated that following its non-binding letter of intent to Hyflux at the end of last month, Emirati utilities group Utico has made a binding offer to invest S$400mil to the company.

Utico’s chief executive officer Richard Menezes was quoted by Reuters as saying last Sun (12 May) that Utico will provide Hyflux with working capital and any urgent interim funding as a part of the binding offer, and that it would negotiate the matter with Singapore’s national water agency Public Utilities Board and Hyflux’s retail investors.

Maybank, Hyflux’s largest secured creditor, has appointed receivers and managers from insolvency firm Ferrier Hodgson to seize control of the Tuaspring power plant, ST reported.

The Public Utilities Board (PUB), Singapore’s national water agency, will take over the Tuaspring water desalination plant as well as its shared infrastructure starting this Sat (18 May), just a day after the termination of the Water Purchase Agreement with Hyflux.

Sembcorp Industries group chief executive officer Neil McGregor, however, told BT on Wed at the conglomerate’s first quarter results briefing that the group is eyeing the Tuaspring power plant.

“We were once interested… We are keeping our options open. Naturally, if the price was right, this may be of interest to us. But we have to wait and see what transpires… So we… are keeping an eye on the development,” he said.

Sembcorp Industries was reportedly only one of two bidders that were pre-approved by the PUB as the Tuaspring power plant’s potential buyer. However, only Sembcorp had submitted a final bid, and the offer was purportedly “under book value,” according to ST.

The post Third potential white knight investor for Hyflux makes non-binding letter of intent for overseas assets appeared first on The Online Citizen.

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Time to Load Up on These 2 Stocks

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I’m not going to lie. I was hoping to have a bit more time for some dividends to build up before I had to think about buying stocks. While most of my Canadian dividend-paying favourites have held together quite nicely so far, there are a couple of companies which are beginning to look attractive once again.

That’s the beauty of headline noise. It prices in the damage an event might have, like the potentially negative impact of tariffs and trade wars, into stocks before anything actually happens.

Although these companies still do not have huge dividends, even after the big pullback in their share prices, both Magna International Inc. (TSX:MG)(NYSE:MAG) and Nutrien Ltd. (TSX:NTR)(NYSE:NTR). But their dividends have been growing and have the added benefit of being paid out in US dollars.

Both companies are cheap on a price-to-earnings basis, with Magna currently trading at a price to earnings (P/E) multiple of 5.6 times trailing earnings and Nutrien at a P/E of 8.6.

On a price to book basis, both stocks are equally cheap. The companies trade at about 1.3 times their book value, making these excellent value candidates.

Of course, the stock prices are being hit for a reason. Trade issues have already taken a toll on Magna, with many of its financial results having been hit in the recent quarter. In Q1 of 2019, Magna saw its sales decrease by 2% year-over-year. Adjusted EBITDA decreased by 18% over the same period. The trade turmoil is definitely taking its toll.

Nutrien did slightly better in the first quarter of 2019. It saw sales that were essentially flat, increasing only 1% year over year. Adjusted EBITDA, however, increased by 22%, much better than was the case for Magna.

Most of the difficulty facing Nutrien had more to do with weather conditions in the United States and Australia. The company blamed a wet spring resulting in late seeding for some of the decrease.

If these results were not optimal, why recommend these companies as a buy? Well, for one thing, the best time to buy shares of great companies is when people are throwing them away. Both Nutrien and Magna are great companies whose products will be in demand for years to come.

Magna, for one, is an auto parts maker that makes components for a number of different companies. While it’s tied to the auto cycle, it’s not subject to changes in style and fashion in the same way as an automobile company. Magna has also been investing in autonomous vehicles, a technology that might be in high demand in the coming years.

Nutrien also has products that are in demand. It provides materials for food production, both through its wholesale commodity business which produces potash, nitrogen, and other materials for fertilizer as well as through its retail business, which operates heavily in Canada and the United States and is expanding worldwide.

These companies also have respectable dividends yields that have grown larger with the pullback in their stock prices. Magna’s yield sits at 3.24% and Nutrien’s is currently at 3.44%.

These companies are both growing their dividends as well. Magna raised its payout by 11% in February and Nutrien raised its payout by 27% in 2018.

Time to buy shares in these companies

Both Magna and Nutrien’s share prices are sitting at attractive levels and the long-term outlook for both companies is bright. There might be some downside to these stocks in the near-term, but if you are a long-term investor with a multi-year time horizon, these stocks are sure to reward you.

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Fool contributor Kris Knutson owns shares of Magna Int’l and Nutrien Ltd. Magna and Nutrien are recommendations of Stock Advisor Canada.

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Question Time for Ministers to be introduced in Malaysia’s Parliament this July

The introduction of Prime Minister (PM)’s Question Time is one of the latest changes to Malaysia’s Parliament sessions that will be implemented in July this year, according to Deputy Speaker Nga Kor Ming.

Speaking at the “New Malaysia – Old Politics” forum at Wisma Methodist in Kuala Lumpur last Sat (11 May), Nga said that the suggestion to slot in PM’s Question Time is derived from the UK Parliament’s practice of allocating approximately half an hour every Wednesday for the PM to answer questions from Members of Parliament (MPs).

Malaysiakini quoted him as saying: “This is one of the best practices that has been implemented by the House of Commons in the UK.

“The PM will be present to answer questions from MPs, and he will not be allowed to delegate the questions to his deputy.

“We are planning to televise the PM Question Time live so that you will not have to depend on baseless news [sources],” added Nga.

The practice will also extend to Ministers holding other portfolios, which will be seen through the introduction of Ministry Day, he said.

“For example, Monday will be set as Finance Ministry Day, which means that Finance Minister Lim Guan Eng’s presence in Parliament will be mandatory on that day, and he will be required to answer questions related to his Ministry,” Nga illustrated.

He added that such an arrangement will enable Ministers to fully concentrate on their workload outside of Parliament on other working days.

Another significant change underway is the suggestion to separate Parliament from the Executive arm of government, which will involve setting up a Parliamentary Service Commission this year.

Nga said that the particular change is rooted in the need to uphold the independence of the House, in tandem with the doctrine of separation of powers.

“Under the current structure, Parliament is bound by the Prime Minister’s Department, and it is absurd. The former should be free and independent from the latter,” he added.

Malaysiakini noted that Nga had previously mentioned plans to draft a Bill regarding the matter in Oct last year.

The post Question Time for Ministers to be introduced in Malaysia’s Parliament this July appeared first on The Online Citizen.

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