Due to the recent fall in the Unibail-Rodamco-Westfield (ASX: URW) share price, the ASX 200 REIT is now a high yield share.
It goes ex-dividend on Tuesday 24 March. Therefore, based on Thursday’s closing price this payment alone will yield 5.8% to be paid on 9 April.
If you want this payment you must buy these shares by close of trading on Monday. The company has a 9% dividend yield for the past 12 months. With over 2,000,000 shares traded on Thursday, the URW share price has already risen 8% as investors position to capture earnings.
URW is a very interesting REIT. Its share price has fallen 60% since the same time last year. This was on the back of poor results stemming from the purchase of the Westfield international shopping assets.
It is Europe’s largest commercial real estate company. It has assets in continental Europe, the UK and the USA. Where the company owns an impressive array of shopping centres, convention centres and offices.
On the ASX, this high yield share is listed as a 20-1 ratio chess depository interest (CDI). CDIs are financial products and not shares in the actual company. Holders of the CDIs obtain “beneficial ownership” of those foreign financial products. This is different to legal title. It is wise to understand this further prior to committing funds.
My interest in URW stems from my prior life as a traveller as I have visited many of the fund’s properties internationally.
Swimming with sharks
This trade is not without significant risks. An investor needs to be comfortable that they understand the risks and are willing and able to withstand the downside.
On 16 March, the company announced it had been impacted severely from the coronovirus pandemic with shopping centres across Europe and the USA closing. It confirmed that 2 centres remained open in London, although with dramatically reduced footfall.
In the medium term, this means a reduced earnings statement for FY20 full year results. It may also extend into FY21 as nobody knows how far the virus pandemic has to run yet.
The company’s 2019 annual report showed clear rises in most of the performance indicators. As a result it appears the share market has marked this company too harshly.
While the dividend payout is a definite return in a short time period, the medium term future for these shares are less certain. They have indicated a very large pandemic impact. As centres of social gatherings they are likely to be feeling this impact for some time to come.
This appears a good price to enter this high yield share and pick up a strong dividend payment within a short period of time and a high yield going forward as the share price rises.
From a long term view, there will be a significant earning in a period where profits take a lot of work. The company has just under half a billion euros cash on hand to minimise the impacts of reduced FY20 cash flows for the first half.
The URW share price will then likely see a gradual rise over the next 12–18 months. Even if there are closures of some of its assets, its value is definitely higher than this current share price.