Up 13%, Killam REIT Looks Like It Has More Room to Run

Killam REIT (TSX:KMP.UN) has seen shares climb 13% since market bottom, but come down recently after 2023 earnings.

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There are some quiet stocks on the TSX today. Ones that have been performing well as shares climb higher, with very little fanfare.

One of those companies is Killam Apartment REIT (TSX:KMP.UN). The real estate investment trust (REIT) may still be down in the last year, but shares have climbed 13% since the market bottom in October. Which is why today we’re going to look at why this REIT might just be your new favourite dividend stock.

About Killam 

Killam stock is one of Canada’s largest residential landlords, specializing in the acquisition, management, and development of multi-family rental properties. The REIT owns and operates a diverse portfolio of residential properties across Canada, including apartment buildings, townhouses, and manufactured home communities. The company’s properties are located in major urban centres and secondary markets, catering to a broad range of tenants and demographics. 

While Killam Apartment REIT is primarily focused on the Canadian market, it has a presence in several provinces, including Nova Scotia, New Brunswick, Ontario, Alberta, and British Columbia. The company’s geographic diversification helps mitigate risk and exposure to local market fluctuations.

That’s proven to be beneficial during today’s economic downturn. While the company’s share price has dropped, let’s take a look at whether the market has overreacted quite recently by considering earnings.

Earnings momentum

When we take a look at a company’s quarter-over-quarter performance, we can see whether the stock is demonstrating momentum. That way, we can see whether the stock is doing better as time goes on, or worse. In the case of Killam REIT, let’s look at the last three quarters to find out.

The second quarter saw net operating income (NOI) come in at $56.2 million, with funds from operations (FFO) per unit of $0.30. The company also disposed of $72.2 million of non-core assets to stay on track for $100 million for the year.

The third quarter saw NOI come in higher at $60.2 million for the quarter, with FFO per share also rising to $0.32. Plus, it managed to surge past its goal hitting $130.5 million in property sales. By the fourth quarter, the company had come back slightly, with NOI at $56.5 million, and FFO at 0.28%. While still up year over year, it was a drop quarter after quarter, which is likely why shares dropped. Plus, Killam achieved $168.7 million in property dispositions, as well as $69.3 million in acquisitions.

Looking ahead

With all these acquisitions on hand and the company’s balance sheet now stronger than ever, hopefully growth is in the near future for Killam REIT. And that looks likely, given again the acquisitions and other means of growth.

The company now has an additional 415 units as of 2023, and the first quarter should see results come in even higher. So with shares up 13% since market bottom, but still down from 52-week highs, and a dividend yield at 4.15%, I’d say Killam stock is certainly worth your attention on the TSX today. Especially for dividend-focused investors looking for a surge in growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Killam Apartment REIT. The Motley Fool has a disclosure policy.

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