Saturday, May 11, 2019

Netlink NBN Trust: Your Go-To Stock For High Yield

According to DBS, the market is now on a search for high yield with the Fed turning more dovish. This contrasts with previous concerns on higher than expected 10-year bond yields.

Netlink NBN Trust is currently trading at approximately 6.3 percent FY20F yield compared to the average yield of 6.0 percent offered by large-cap industrial S-REITs. DBS notes that given the regulated nature of its business and no lack of debt headroom to fund acquisitions, Netlink NBN Trust should be trading at a lower yield. This means that there is room for Netlink NBN Trust’s share price to take off.

Moreover, one unique advantage of the over REITs and Business Trusts is that a potential rise in the cost of capital might lead to higher regulated returns from 2022 onwards, translating into higher distributions.

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