Published Fri, 11 Aug 2017 20:39:04 -0400 on Seeking Alpha
Investment Thesis: Ignore the noise around the constant "bubble" talk and buy this regular dividend raiser with an incredibly low payout ratio.
We have previously written about Brookfield Real Estate Services Inc. (OTCPK: BREUF). We noted several positive developments during the Q2-2017 quarter that make this stock an even better buy today.
1) Steady increase in realtor numbers.
Year to date, BREUF had an increase of 536 realtors driven mainly by acquisition of new franchise agreements. The acquisition more than offset the small loss of non renewed contracts. BREUF is renewing greater than 95% of its contracts and that bodes well for a long term revenue outlook.
Source: BREUF Q2-2017
The average lease term extends over 10 years and provides great visibility into the future.
2) Cash flow from operations (CFFO) increasing by 14% in Q2-2017
Q2-2017 saw strong performance driven by increased realtor network, royalty CPI adjustments implemented in 2016 and higher sales volume fees.
Impressively, unlike companies that regularly dilute the share count, not a single additional share was issued over the past 12 months. Adjusting for taxes paid, which BREUF does not count in CFFO, the company's payout ratio stood a very impressive 60% in Q2-2017 and under 65% for the 12 month period ended June 30, 2017.
3) 3% hike in royalty fees based on CPI
During the first quarter, the Company announced that the Royal LePage... Read more