TS2B: Tech Stocks 2 Buy, Dividend-Payer Edition on City Office REIT 03.29.21

Good morning all you Cyberpunks out there and welcome to the BCB Cyber Series that takes on the Tech stocks that can provide the cyber-fuel we need to pursue our digital wealth passions.

Today we are once again tackling those big dividend payers that can add passive cash flow to our portfolios. As we dig for the cyber-fuel we need, we are always working to make sure the best of the best, those monster companies in tech, can form a key portion of our balanced portfolios.

For Dividend Payers, BCB Cyber is always looking for a forward annual dividend yield of over 3% as our key, defining characteristic. Better yet, we are looking for great tech companies we can build on overtime, delivering consistent value and technological prowess, not to mention a little cash on the side.

Today we jump into a stock that’s knee-deep in our favorite aesthetic, the city. In particular for this one, a special type of city known as the 18-hour city. This week, it is all about the one investment company working specifically on such an idea, CIO: City Office REIT.

Focus on the City: Tech Play Paradise

The city is the most unique aspect of the cyberpunk’d landscape, with its high-flying skyscrapers, industrial parks, and development centers few things could be more 20th/21st century dystopian. And within each of these environments, office space plays a key role. Despite the pandemic influences, people will always need a place to develop their ideas and build the communities necessary for advancement.

Where we are all familiar is the cities that never sleep. LA and NYC come to mind. however, across America a new phenomenon has developed, the tech-fueled 18-hour city. From Denver and Dallas to Phoenix and Seattle, urban landscapes are shifting and changing quickly to fit the nimbleness of tech in the 21st century. This week we take on the REIT that is focused on this phenomenon with a unique approach to real estate investment: City Office REIT.

As always though, in our dividend plays we are looking for that forward dividend yield of over 3% and we definitely find it here.

A definite plus here is consistency in the yield, even when adjusted due to the pandemic, we see that CIO has built balance and steadfastness over the last few quarters.

Before we dive too deep though, we strongly advocate that we don’t act solely on anyone else’s opinion, even ours! Make sure we are all thinking for ourselves as self-definers and making our own decisions. In the end, the responsibility is on each one of us as individuals. So decide wisely!

BCB Cyber: Dividend Payer Edition on CIO

Jumping right in now the BCB Cyber way, we cover 3 quick pieces of important information so we can get moving on our day. First, we tackle the story to find out who and what the company is, second, we look at the numbers both positive and negative, and finally we discuss our position on the stock.

This is TS2B, Tech Stock to Buy, Dividend Payer Edition and this week we are going to take on City Office REIT, the Dallas, Texas Real Estate investment innovator.

1 – STORY

The story for CIO is a straightforward one: built on focus. With properties in Dallas, Denver, Orlando, Phoenix, Portland, San Diego, Seattle & Tampa.

With these cities as a focus, CIO places itself into some of America’s best markets for growth as the landscape of the country changes. Plus a focused strategy of combination operating cash flow growth and targeted acquisitions that fit the 18-hour profile, make CIO a truly unique play within the office real estate market.

Already, CIO has amassed a considerable footprint. Within these 8 cities, they already own 65 buildings with over 5.8 million square feet of rentable space. Not one to settle though, CIO is regularly wheeling and dealing to better position the company within an ever-evolving market emerging from the global pandemic.

2 – BY THE NUMBERS

Turning to the numbers now, BCB Cyber loves to follow five specific metrics: Revenue Growth, Forward Price to Earnings Ratio, Return on Assets, Operating Margin, and Debt Considerations.

Getting right down to it this company is making money and growin’ those revenues. Since the end of 2017, and despite the terrible conditions for offices in the last year, the company has grown revenues by over 50%!

However, while we don’t have an established Forward P/E as of yet, we do see that the market is taking notice of this opportunity for established value and has begun jumping on board: market cap, price to sales, and price to book have all risen accordingly since the pandemic began.

Getting further down the rabbit hole we find a company that is excelling at what they do. Who would think that a company that provides office space would continue to excel in a market where people can’t get to the office. Quality management had things ready for such a situation and have weathered the storm well with a quality operating margin and an effective leadership team providing value to investors.

Finally, we turn to debt. While the real estate business is often built on debt we see the same here.

There is in fact a substantial debt position when compared to cash reserves but to date, with the established and stable dividend discussed above, CIO has been able to deftly manage the storm and stay not only on target with the dividend despite the debt but also by providing solid cash flow to work with.

All in all, a very positive outlook given the last year that the world has seen.

3 – THE BCB CYBER TAKE

As of this morning, on 03.29.21, our own portfolio has built up an initial position of 1.46%, with an average cost of $9.65. This is definitely a dividend-payer worth buying at the right price and one that BCB Cyber believes to be the right fuel for the fire! Just so happens that we, at the beginning of the month, suggested a buy price of $10.50 and as of today’s pre-market share price, the stock sits at exactly that!

We’ve been excited to add to our position and maintain our cost average under $10 but will be looking to add till this one gets to 3% in our portfolio. This is a great company that has weathered the storm and is making the moves to ensure its financial capacity to take advantage of new opportunities. We’ll be keeping a watchful eye though on the metrics for this company, especially the debt, and should they stay at $10.50 or lower, we’ll be working to build that 3% position in our portfolio.

Remember, we are just like the masses, struggling to make ends meet and build our future. So, we start building and keep doing our homework. This is just what we need to start us on our journey toward cyberizing our lives. Remember too, never place a market order, only go to the LIMIT! Get exactly the price we set for ourselves!

Finally, as always, think for yourself, do your own homework, and cyberize your life with the best in disruptive tech. Learn more in our Wealth Section and dive deeper into Establishing the Baseline on BCB Cyber.com!