Andy Nasr is Managing Director and Senior Portfolio Manager at Middlefield Capital. His focus is on Canadian dividend stocks and REITs.
Northern Property REIT
The REIT owns apartments in small cities or remote locations where there are sizable barriers to entry. Northern boasts a strong balance sheet, compelling valuation and provides investors with a very attractive yield that should increase as management delivers on its organic growth initiatives.
Boralex is one of the largest holdings in our Global Infrastructure mutual fund. The company is an independent power producer with wind and hydro projects in Canada and France. We expect EBITDA to increase from about $100-million in 2012 to $200-million by 2016 as the company completes several contracted projects that will increase its capacity from 507MW to 960MW. We also expect management to initiate a dividend in 2014, subsequent to using existing cash flow to fund projects that under development.
Gluskin Sheff + Associates
The company provides high net worth private client wealth management. We expect earnings growth to accelerate due to an improvement in net sales, rising equity markets and higher performance fees. The shares provides investors with a good yield, attractive valuation and significant upside in the event that the company is acquired.
Past Picks: September 17, 2012
Total return: +31.06 per cent
Brookfield Infrastructure Partners
Total return: +15.54 per cent
Northern Property REIT
Total return: -9.23 per cent
Total return average: +12.46 per cent
Equity valuations remain attractive and should be well-supported by bond-to-equity inflows and global GDP growth, which is accelerating for the first time in three years. During the next several years, we expect the U.S. economy to significantly benefit from rising employment, an improved housing market and the maturation of the 18-37 year-old demographic, Generation Y (“Gen Y”), which is the largest population cohort in the history of the United States. As the Gen Y population matures and the size of middle-aged population increases, consumer spending should accelerate from an annualized growth rate of 2 per cent to the long-term average of 3.5 per cent to 4 per cent. Notably, we believe that the recent sell-off in ‘interest sensitive’ issuers provides investors with an attractive opportunity to purchase dividend paying stocks that offer capital appreciation potential and very attractive, tax efficient, yields. Our focus remains on global dividend paying issuers with relatively low leverage, good organic growth potential and strong management teams that have demonstrated an ability to prudently allocate capital.
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