Today, I’m taking a look at two high-yielding shares which appear to have passed under the investment radars of most investors.
Convenience
NewRiver REIT (LSE: NRR) is a property investor, which owns and manages a mix of shopping centres, retail parks, high street properties and leisure assets. It has a convenience and community-led approach, with a focus on high-yielding-but-low-risk retail properties.
NewRiver’s growth track record is certainly attractive — dividends per share have grown at a compound annual growth rate of 9% over the past four years, while funds from operations (FFO) per share have increased by 11% annually over the same period.
The company released its Q1 trading update this morning which continued to highlight the progress made with its development pipeline. Planning consents for a 236,000 sq ft mixed-use development in Cowley and 38,000 sq ft hotel in Romford had been obtained, while it made further progress made on rolling out its convenience store programme.
Despite near-term economic headwinds, I reckon the REIT will continue to perform well for its shareholders. After all, CEO David Lockhart likes to remind us that the business was founded in 2009 during a severe recession, and in spite of this, it has grown into a FTSE 250 entity in less than eight years. Also, rents and occupancy levels have so far held up well, with average rent increasing to £12.63 per sq ft (up from £12.45 in March) and the retail occupancy rate holding steady at 97%.
With the shares having delivered capital gains of 12% over the past 52 weeks, NewRiver currently trades at a 13% premium to its net asset value (NAV). To most investors that may seem rather pricey, as the UK property sector as a whole trades at a slight discount, but I can see why the shares may justify a premium.
NewRiver has tempting income and growth appeal, with shares yielding 5.9% and growth underpinned by management’s strong experience and track record.
Opportunistic
But for those investors looking for a less expensive play in the sector, Regional REIT (LSE: RGL) may be the right property stock for you.
It is an opportunistic investor in industrial and office assets located in regional centres outside of London. The company may seem like a somewhat more risky play on the property sector, as it focuses on high-yielding, undervalued properties with under-appreciated recovery prospects.
But with this strategy also comes potentially greater returns — Regional REIT aims to deliver an attractive total return of around 10%-15% annually. So far it is doing well. Since the start of the year, it has secured a number of re-gears, achieving an average uplift of 2.8% on headline rents.
And with its shares trading at a discount of 2% to its NAV and yielding 7.3%, Regional REIT seems to offer a potent mix of a high yield and an enticing valuation.
