Q: Do you feel the valuation is stretched? Have been tracking results quarterly for the past 2 years and have noticed the number of stores, including Dollarcity, has been increasing while, at the same time, the number of common shares outstanding has been decreasing. I feel those 2 metrics are very favourable for the shareholder.
An option I have been considering is taking profits in DOL and investing the proceeds in CHP.UN and just compound the 5.1% yield. I recognize there is some risk with Choice REIT but it seems to one of the most conservative REITs available. The reason I am considering this option is my parents, over the course of their lives, lived frugally and saved a substantial amount of money by simply purchasing GICs and reinvesting proceeds on maturity; they never took any equity risk.
Thank you
B
An option I have been considering is taking profits in DOL and investing the proceeds in CHP.UN and just compound the 5.1% yield. I recognize there is some risk with Choice REIT but it seems to one of the most conservative REITs available. The reason I am considering this option is my parents, over the course of their lives, lived frugally and saved a substantial amount of money by simply purchasing GICs and reinvesting proceeds on maturity; they never took any equity risk.
Thank you
B
5i Research Answer:
We would consider CHP.UN decent enough, and have no objections to an investor taking a conservative route over time, if that suits their goals. But this is an apples/orange comparison of a very high quality growth stock and a decent REIT designed for income primarily. DOL is expensive but we think it very much deserves its premium. It has plenty of international growth potential and has proven itself over and over again over multiple decades. If we were to just choose one, we would still (easily) side with DOL as growth managers.