George Weston Limited (TSX:WN) is an interesting stock. It’s primarily a holding company, with a 46% stake in Loblaw (TSX:L) and full ownership of Weston Foods. Loblaw holds an 82% stake in Choice Properties REIT (TSX:CHP.UN), and George Weston directly owns approximately 5.6% of the REIT.
Like many holding companies, George Weston trades at a discount to its parts. It has a market cap of $13.8 billion, while the Loblaw stake is worth $12.5 billion alone. Its stake in Choice Properties is worth about $550 million. That values Weston Foods at just $800 million, while that division generated $285 million in EBITDA in 2015.
In short, George Weston is a way to buy Loblaw shares at a discount while getting exposure to the bakery division.
One thing that’s disappointing about George Weston is its somewhat anemic dividend. Shares only yield 1.6%, and the payout grew less than 2% in the last year. That’s not very exciting.
There’s another option. Investors really looking for yield can invest in George Weston’s preferred shares.
The Series V preferred shares (which have a ticker symbol of TSX:WN.PR.E) pay $0.296875 per quarter, which works out to $1.1875 per share annually. Shares currently trade hands at $23.41 each, which translates into a 5.07% yield.
Or to put it another way, that’s 213% higher than the yield on the common shares. And remember, preferred shareholders get paid first if there’s ever any issues.
