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NewRiver Retail’s dividend yield is key attraction, says Liberum

Published: 07:25 08 Oct 2013 EDT

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NewRiver Retail’s (LON:NRR) key attraction is its 6.6% dividend yield, according to City broker Liberum Capital, which today began its coverage by giving a ‘buy’ recommendation for the stock.

Reflecting the fact that it sees NewRiver as an income play Liberum has a target price of 256p, which is about 6% above the current price of 241.5p.

The broker highlights that the specialist retail real estate investment trust’s (REIT) strategy is to acquire high yielding retail assets with sustainable income profiles.

It also points out that whilst the share currently trades at a 10% premium to net asset value (NAV) there is potential for the company to grow – both in terms of income and NAV.

“The key attraction is a 6.6% dividend yield which we forecast to grow to 7.5% by 2016 driven by earnings accretive acquisitions and asset management,” said analyst Alison Watson.

 

“A recovery in secondary yields meanwhile would deliver significant NAV growth.”

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