The Motley Fool

Why buy to let when this property share’s dividend yields a growing 4%?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A person holding onto a fan of twenty pound notes
Image source: Getty Images.

I reckon the fat and rising dividend yield from Sirius Real Estate (LSE: SRE) is attractive.

The company owns and operates business parks, offices and industrial complexes in Germany, providing flexible and conventional ​workspace to businesses. Since arriving on the FTSE AIM market in 2007, the firm has grown steadily and was promoted to the FTSE 250 index in September.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

An impressive record

Today, it owns 59 properties and has around 4,829 tenants. Over the past 12 years, the share price has risen more than 150% and the dividend is around 120% higher. However, with the shares at just over 77p, the forward-looking dividend yield for the current trading year to March 2020 is running at just under 4%. City analysts following the firm expect it to increase by just over the 11% the following year, extending an impressive record of dividend-raising.

There is more good news in today’s half-year results report for the period ending 30 September. Profit before tax increased by almost 2% compared to the equivalent period the year before and the adjusted net asset value per share rose by nearly 7%. The directors applied their seal of approval and expressed confidence in the outlook by pushing up the interim dividend by just under 9%.

The firm has always been active in its approach to managing its estate, which I reckon adds value for shareholders. Buying, improving and reconfiguring property often leads to better cost recoveries and capital values. Once sites are mature and net income and values have “been optimised”, Sirius often looks at refinancing the sites to release capital for investment in new assets or it may consider selling sites to recycle money into assets with the potential for improvement, which could lead to higher returns.

Adding and realising value

I think the strategy chimes with what tends to work well in general stock investing. The process of selling mature and optimised assets to buy those that have the potential for improvement is really what investing is all about, for me.

In one example of the company’s activities, during the first six months of its trading year, Sirius sold 65% of five assets to AXA Investment Managers-Real Assets at a “significant premium” to previously reported book value. The deal generated around €70m of funds to reinvest. Sirius retained the remaining 35% and will operate the assets on a fee basis. The overall arrangement will be known as the Titanium real estate investment joint venture.

Chief executive Andrew Coombs said in the report that the Sirius value-add business model is working because of the diversity that comes from “intensive” asset management and the firm’s “wide range of products.” Looking forward, he sees strong demand for commercial rentals in the German market and Sirius has “considerable” potential to increase rent roll and capital values. The company has a war chest of around $80m available to fund future acquisitions. I think the shares are attractive.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.