Annual Revisit: Income Ideas (Part two)

By Travis Johnson, Stock Gumshoe, February 3, 2012

The annual parade continues — I’m updating my thoughts on the stocks I’ve suggested in the past as “Idea of the Month” investments, and in this installment we’re looking at what are mostly dividend-growth stocks: income ideas, but not stocks that have particularly huge current dividends (those “bigger yielders” were covered in Part one here).

As we’ll continue to do throughout this review, I’ll label these with a “buy, sell or hold” tag and discuss them in order of attractiveness, from faves to least favorites. The companies I’ll look at in this review (not in order here) are: Coresite (COR), Northern Property REIT (NPRUF), Retail Opportunities Investment Corp (ROIC), Acadian Timber (ACAZF), Reckitt Benckiser (RBGPF), Cielo (CIOXY) National Fuel Gas (NFG) and Weyerhauser (WY).

Retail Opportunities Investment Corp (ROIC) — Buy

ROIC is a stock I’ve bought a few times and, though it’s not one of my personal top ten holdings, it’s doing better than many of my holdings, the very definition of slow and steady. (I also own some warrants on ROIC — as a remnant of their “blank check” past as a SPAC, they have long-term warrants that expire in 2014 at a strike price of $12. Warrant ticker is ROICW). This is a shopping center REIT, with a focus on “necessity retail” centers anchored by grocery stores and pharmacies, and run by an extremely successful West Coast real estate team that has built similar portfolios before. The current yield, taken by annualizing the last quarterly payment of 12 cents, is just about exactly 4%, slightly less than other well-known similar-focus REITs like Realty Income (O, 4.7%) and Kimco Realty (KIM, 4.2%), but I think we’re just at the beginning of pretty substantial dividend growth for ROIC. They did do a small capital raise in December, mostly to pay down some debt, but they continue to have plenty of available borrowing to make acquisitions and they’re growing their property portfolio quite quickly thanks to their connections in the industry and their ability to make some buys of properties that haven’t yet gone on the market. In their last quarterly report they estimated that they would have Funds from Operations (FFO is basically income with depreciation and amortization — non-cash charges — added back in, a measure that REITs typically use to determine their performance) of 76 to 80 cents in 2011, and that they plan ...

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