Property group NewRiver Retail (NRR) has spent the past few years growing into its generous dividend and 2015 marked the point at which the group's payout finally became covered by so-called EPRA earnings (earnings excluding property revaluations and gains or losses on disposals) and cover is expected to rise from here (see bar chart below). We think that this, along with investors' increased interest in the type of secondary property New River owns, the company's shrewd approach to purchases and development, and a planned move from Aim to the main list in July, means NewRiver has a lot to offer as an income play in 2016 and the shares should be attracting more investor attention as the year rolls on.
- Very attractive dividend
- Modest loan-to-value ratio
- Shrewd property acquisition and development strategy
- Planned move from Aim to main market
- Big exposure to the retail sector
- Dilutive effect of share placings
When buying shares for income, especially shares in a fast-expanding property company, cover is a key consideration, and that is something that NewRiver now delivers on. It has grown income to underpin the dividend by investing in high-yield retail assets bursting with development opportunities. And, importantly, as the rent roll continues to grow, management is committed to pursuing a progressive dividend policy. And the prospective 5.5 per cent yield is made all the more attractive by the fact dividends are paid quarterly.