Investor appetite for riskier assets has received a shot in the arm in recent days. For the moment the recent stock market crash is but a memory. The FTSE 100 climbed to two-week highs at the end of this shortened week and FTSE 250 stocks followed them higher. Britain’s second-tier index was actually trading close to one-month highs.
Signs of slowing Covid-19 infection rates have caused share investors to break out their cheque books en masse. It still pays to be prepared, of course, given the fluid nature of the coronavirus tragedy. Any signs of fresh trouble could drive global share indices through the floor again.
Giant dividend yields
It makes sense for share investors to keep protecting themselves with some wise stock buys then. Tritax Big Box (LSE: BBOX) is one great safe haven to buy despite increasing coronavirus infections in the UK, I feel.
I’d argue that this FTSE 250 stock looks too good to miss at current prices. It carries a forward price-to-earnings (P/E) ratio of 18.2 times, way below its historical norms around the mid-20s mark. What’s more, Tritax carries monster dividend yields of 5.5% and 5.8% for 2020 and 2021.
I admit that big dividend yields are ten-a-penny following this most recent share market crash. With the Covid-19 crisis set to persist for months yet, and the global economy set for a painful and prolonged recession, a great many of these look like classic investor traps. But Tritax Big Box is not a share that falls into this category.
Rental resilience
The FTSE 250 share — which provides so-called big box logistics and warehousing spaces — underlined its robustness in fresh financials on Wednesday.
Tritax isn’t totally immune from the economic consequences of the coronavirus crisis. Few companies are. It said this week that some of its clients are experiencing “unprecedented disruption” because of the government-imposed lockdown. This has had an “immediate impact on their near-term cash flows,” the property play added. Amd that it is talking with customers about how to get through the pandemic.
Despite these troubles, however, Tritax said that it still expects to collect 96% of rents by the end of May. These are in respect of advanced quarterly rental payments that were due by April 1.
Don’t fear another stock market crash
There are two major reasons why Tritax continues to operate resolutely. Firstly, a large number of blue-chip clients use its network of nearly 60 big boxes, companies that are more financially robust to withstand times of crisis like these. Indeed, its top five customers by income — Amazon, Tesco, Morrisons, Co-op and Howdens — account for more than a third of total income.
Secondly, as this list shows, a vast amount of Tritax’s rents are sourced from firms in currently-defensive sectors like e-commerce, food retail and third-party logistics like postal couriers. No wonder the business vowed to continue paying quarterly dividends and eyed a full-year target of 7p per share for 2020.
I consider Tritax, with its high-quality customer base and rock-solid balance sheet, to be a brilliant buy in these troubled times. I’d be very happy to buy it today, even though another stock market crash could be around the corner. I think it’s too cheap for long-term investors to miss.