Perhaps no sector of the economy has been hit as hard as retail over the course of the past year, leading to questions about how valuations in this sector have responded (or over-responded) to real long term financial risks. While I agree that the majority of the long term risk factors are both real and pertinent in today's evolving retail environment, I would also go so far as to say that in specific instances, companies linked to retail but with strong fundamentals may actually outperform long term given their newfound value status and ability to grow earnings amid a sea of high priced growth options today.
One such company which boasts a very attractive dividend yield of 5.7% is RioCan Real Estate Investment Trust (TSX:REI.UN). RioCan operates a host of retail oriented real estate assets, and has been beaten up recently to a level where the company's valuation is beginning to really make sense. With the lowest valuation in quite some time and a very reasonable dividend payout ratio, RioCan has the potential to provide investors with a significant amount of stable income in a sector with significant growth opportunities, unlike many other REITs today boasting valuations which are among the highest in the past decade.
When looking for value, it is important to look where others are not, and that can sometimes be in sectors/companies which may be uncomfortable at first.
Invest wisely, my friends.
