Abacus Property Group declines 10%: Should you buy?

Despite an outstanding full-year report in which Abacus Property Group (ASX: ABP) grew revenues by 39% and underlying profit by 21%, Abacus shares have dropped 10% in the past week or so to return to pre-report levels.

With the company paying a yield of 6% and forecast to continue growing steadily in future years, investors could turn another’s loss into their potential gain with an acquisition of this property developer.

If this is the first time you’ve heard of the company, you should know that Abacus has a strong record of buying mis-priced assets and actively managing them to increase value before selling at a profit, and this is where a good portion (60-70%) of the company’s earnings come from.

Abacus also holds a $900 million dollar commercial property portfolio which comprises the remainder of the portfolio and counts national storage business Storage King among its tenants.

With competition for property heating up as investors jump into the low-interest rate market, Abacus has also begun diversifying into residential property development and sales by investing $47.3 million in 2014 into nine residential projects on the east coast of Australia.

While this is only a tiny part of Abacus’ $2 billion portfolio the company believes it is a viable way to deliver on its growth targets and initial developments look promising.

With all of these factors in mind, it’s easy to see why Abacus Property Group looks likely to continue delivering a 6% plus yield to investors, combined with average single-digit earnings growth for the foreseeable future.

Prospective buyers should note that Abacus shares have a Net Tangible Asset value of $2.38 a share, making a purchase at today’s prices of $2.49 look very appealing indeed.

If you’re after an investment with a little more zest than Abacus, why not check out The Motley Fool’s free report on our Top Stock Pick for 2014?

Although its yield is not yet as strong as Abacus, this small-cap share is growing earnings four or five times as fast and an investment today could see you earning a proportionately greater dividend in a few years from now.

This recommendation is a company I already own a significant parcel of shares in and one that I think all income-seeking investors should have a look at as well.

If you’re interested, you can access this free report simply by clicking on the link below and entering your email address – it takes less than 30 seconds and you’ll be directed to it soon after.

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Motley Fool contributor Sean O'Neill doesn't own shares in any company mentioned.

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