Investors are being urged to hold onto Dexus stock, with research house, Morningstar backing the property group to provide a “relatively attractive 5.6 per cent distribution yield”.
Morningstar issued a hold recommendation for the group’s stock, reporting it believed “the stock is mildly undervalued at current prices near $7.35”.
“The main attraction is the large, high-grade domestic office portfolio,” the research house reported.
“It also owns an industrial portfolio in Australia. Financial leverage is acceptable and medium-term income is secure, underpinned by relatively long leases with fixed CPI-linked annual rent increases.
“The development and funds management businesses leverage existing expertise to increase returns, dependent on investor demand.
“We believe Dexus has competitive advantages and returns indicative of a narrow economic moat.”
