Tuesday’s TSX breakouts: This REIT has a stable distribution, 4.8% yield

The S&P/TSX composite index looks like it may cross into double-digit return territory on a year-to-date basis today.

On Monday, the Index advanced 49 points or 0.35 per cent and is now up 9.73 per cent year-to-date, with all sectors, except the health care sector realizing gains. One hundred and twenty-two members in the TSX Index advanced, 103 declined, and 9 were unchanged.

On today's report, the number of securities on the positive breakouts list (stocks with positive price momentum) has climbed to 68, of those 31 are energy stocks. Meanwhile, there are just four stocks on the negative breakouts list (stocks with negative price momentum), three of which are health care stocks.

Discussed below is a small-cap real estate investment trust (REIT) with a market capitalization of just over the $300-million mark that offers investors an attractive, stable distribution equating to a yield of 4.8 per cent – Morguard North American Residential REIT (MRG.UN-T).

A brief outline is provided below that may serve as a springboard for further fundamental research.

The company

The REIT provides unitholders with exposure to residential rental properties in both Canada and the United States. Its portfolio includes 15 properties in Ontario and Alberta, and 31 residences across seven states: Alabama, Colorado, Florida, Georgia, Louisiana, North Carolina, and Texas.

Distribution policy

The REIT has paid its unitholders a monthly distribution of 5 cents per unit since 2012. This equates to 60 cents on a yearly basis, and an annualized yield of 4.8 per cent.

In 2015, the adjusted funds from operations (AFFO) payout ratio was 70.5 per cent.

Valuation

According to Bloomberg, the unit price is trading at price-to-AFFO multiples of 13.1 times the 2016 consensus estimate and 12.6 times the 2017 consensus forecast.

Analysts' recommendations

According to Bloomberg, the one year price target is $13.63, which is based on four buy recommendations. There are no hold recommendations nor sell recommendations. This suggests the unit price may potentially rise 8 per cent. Individual price targets are as follows: $13, two at $13.50, and $14.50.

The consensus adjusted funds from operations (AFFO) estimate is 96 cents in 2016, rising to $1.00 in 2017. The consensus funds from operations (FFO) estimate is $1.18 in 2016, climbing to $1.23 in the following year.

Chart watch

Year to date, the unit price is in a strong uptrend, rising appreciated 18 per cent so far this year.

There is downside support at $12, near the its 50-day moving average (at $11.99), and failing that at $11, close to its 200-day moving average (at $11.01).

The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a security to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

Below is a list of securities principally from the S&P/TSX composite index and the S&P/TSX Small Cap index that are technically breaking out, reaching new 55-day highs or lows. Securities on the positive breakouts list have displayed positive price momentum during this period. Securities on negative breakouts list have experienced negative price momentum.