Recent Sell – RioCan REIT

REI

I decided to close my position in RioCan REIT (REI.UN.TO). RioCan is one of the largest real estate investment trusts in Canada and specializes in the retail space. The company owns interest in 340 retail properties in Canada and US, including 15 properties under development.

It has been one of my longest holding – a position that I initiated in April 2009 (right at the bottom of the market during the financial crisis). It was yielding 10% and back then – in my chase for yield, decided to initiate a position. In a matter of months, the stock price doubled and has stagnated since. However, I was able to reap the 10% yield-on-cost month after month. Its a company which has good financials, but shareholders currently get a 5% yield. While that is ample dividend to expect from a stock, the company has failed to raise dividends during good times and my patience has run out.

That was not the only motivation to sell.

I also needed access to some cash – and had to sell something from my Tax Free Savings Account (TFSA) and withdraw the funds. Considering various other options in that account, I figured I’d rather sell a stock with stagnant dividend instead of companies with lower yield that regularly give me pay raises.

Overall profit (including dividends) was approx 150% over a course of approx 7 years. With this sale, I lose approx C$101 in forward annual dividends.

13 thoughts on “Recent Sell – RioCan REIT

    • Hi AT,
      We are using some funds from the emergency fund and decided to take some out of our investment as well. We wanted to leave our emergency fund above a certain threshold that we feel comfortable with.

      R2R

  1. I don’t follow the company but I’m curious why they haven’t been giving raises? Are they struggling to grow the company?

    It looks like a solid choice to sell considering that you needed cash. Solid gains over the time and blah dividend growth kind of puts it at the top of the list.

    • Its a very Canada-centric company. I think 90% of its operations are based here in Canada and the 10% is in US.
      It beats me on why there have been no raises…the financials look in good shape – and in fact, the company looks a bit undervalued. They have continued to invest and grow the operations at a steady pace, but no extra payouts for shareholders. I still consider it a good company and recommend ppl to take a closer look – but I had to sell something and this one made it to the chopping block.

      R2R

  2. R2R,

    We’re dividend growth investors and as such we need to keep our eyes on the prize. If the company isn’t raising dividends, it’s not going with the upward trend that we need. It’s stagnant and we’re not trying to stay that way. I’m interested to know where your capital from the sale will end up going to. I’ll be keeping my eye out!

    -Dividend Monster

    • Thanks for stopping by and sharing, DM.
      For now, those funds arent going to be invested elsewhere as we needed access to cash. I will continue contributing in that account over the coming months – so look forward to see more interesting purchases in quality companies.

      R2R

  3. I feel you R2R, I’ve own Riocan for about 2 years now and its the only company i have owned that hasn’t raised its dividends. Will i sell? probably not. but i completely see where you are coming from. Thanks for sharing

    Ace

  4. Gary says:

    Do you think with increasing online shopping that perhaps the big box stores might cut back on their bricks and mortar locations thus effecting RIOCAN? Personally I think you made the right decision!

    • Hi Gary,
      There is always that threat to the retail businesses. Most retailers are hurting because online shopping is eating their lunch. But do I think that all retailers will go under – no. There will always be a market for it. While something like shopping might take a hit — ppl will always want to go out to socialize – either going to the movies or restaurants or just purely for other business needs – such as bank branches, grocery stores etc. So, retail REITs need to get smarter about what their target market is.

      I had to pull the plug on one of my investment and RioCan it was. I’ll have to wait and see if I made the right choice. Hopefully I wont have sellers remorse 🙂
      Thanks for stopping by
      R2R

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