When you can find a stock that most people hate, but it’s sitting on assets that are worth far more than what it’s trading at, you’ve found yourself a very lucrative company to own. In my opinion, Dream Office Real Estate Investment Trst  (TSX:D.UN) is just that type of company. The stock price of the company is far less than what the value of the assets is worth.

According to an analysis by Dream Office, the value of all of its real estate is $23.64 per share. However, the price per share is $16.88. That means that you are getting $6.76 in free assets when you buy a share of this stock. Buy 1,000 shares, and you own $23,640 worth of assets at a cost of $16,880. This is a great position to be in because when more investors make that connection, the share price should appreciate closer to its NAV, giving you a great return on investment.

But why is there such a big difference? The primary reason is its Albertan holdings. Alberta’s oil and gas companies are suffering from low oil prices, and so, as a result, Dream Office’s occupancy is down from 89% in 2015 to 84% this year. That’s a lot of empty square footage that’s not making the company any money. So Dream Office decreased the value of its Alberta holdings by 45%. However, that took the NAV from over $30 per share to the $23.64 it is today, so the discount survives even with its Albertan holdings being worth very little.

The good news is that management has a plan to bring the NAV and the share price closer together. If investors won’t value the shares, perhaps investors will value the physical assets. By the end of 2018 management wants to have sold $1.2 billion in non-core assets. So far, it has sold two million square feet across 17 properties for $437 million. There’s over $100 million more in various stages of discussion and contract.

I expect that management will use the funds to pay down debt and look for inexpensive opportunities where it can further invest. Other REITs, like RioCan Real Estate Investment Trust, went from selling lucrative assets to paying down debt and investing in its core holdings. Dream Office could do the same thing.

If you are patient with Dream Office, the returns could be incredibly lucrative in multiple ways. The first is the dividend. It currently pays a mind-blowing 8.89% yield, which is $0.125 per share each month. And that’s after the company was forced to cut the dividend because its payout ratio was close to 100%. Now investors earn $1.50 a year and the payout ratio is only 56%.

Earning back nearly 9% of your initial investment every year makes it that much easier for this company to break even and then grow your portfolio. At some point, Dream Office’s Albertan holdings will improve in value. When that happens, I expect the share price and NAV will get closer, allowing investors to achieve significant capital gains. And along the way, you can take the dividends and either buy more shares of this underpriced company or invest it in other assets. Safe, high dividend-paying stocks are a great way to get rich.

The exclusive buy "signal" you can't ignore

Over the course of The Motley Fool U.S.'s 23-year history, this rare buy "signal" has generated massive wealth for those that have been smart enough to pay attention to it. It's so rare, that it's happened less than two dozen times... but when it does ... it's made investors undoubtedly rich. If you're interested in knowing the stock behind this rare buy "signal"--and you're excited to take advantage of this golden opportunity, then you're going to want to read this. Click here to unlock all the details behind this new recommendation from Stock Advisor Canada.


Let’s not beat around the bush – energy companies performed miserably in 2015. Yet, even though the carnage was widespread, not all energy-related businesses were equally affected.

We've identified an energy company we think offers one of the best growth opportunities around. While this company is largely tied to the production of natural gas, it doesn't actually produce the gas. Instead, it provides the equipment required to get natural gas from the ground to the end user. With diversified operations around the globe, we think it's a rare find in the industry.

We like it so much, we’ve named it as 1 Top Stock for 2016 and Beyond. To find out why, simply enter your email address below to claim your FREE copy of this brand new report, "1 Top Stock for 2016 and Beyond"!

Fool contributor Jacob Donnelly has no position in any stocks mentioned.