Today, I’m taking a look at two high-yielding shares which appear to have passed under the investment radars of most investors.
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.
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.
Jack Tang has no position in any shares 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.