Analyst Actions: Raymond James Rates Labrador Iron Ore "Outperform"

By Midnight Trader,  November 01, 2012, 02:43:12 PM EDT

Labrador Iron Ore Royalty Corp. (LIF-UN.TO) is a "safe harbour investment in iron ore" -- with a notable dividend yield, to boot, says Raymond James analyst Adam Low, the Globe & Mail reports.

Investors get a "valuable minority stake in an established and growing iron ore complex," as well as a 5% annual dividend yield, based on forecast 2013 distributions to shareholders of $1.50/share, Low wrote in a research report.

"We expect the shares to trade at a premium given its status as an established and growing producer, its scarcity value as one of two iron ore producers listed on the TSX, and its consistent payment of a substantial dividend yield."

The dividend is supported by cash flows from Canada's largest iron ore miner, the Iron Ore Company of Canada, in which Labrador holds a 15% stake. The payout also stems from a 7% gross revenue royalty and 10 cent-per-tonne commission fee payable to Labrador on all iron ore products produced, sold, and shipped by the Iron Ore Company. Over the last 10 years the annual dividend has tripled in size.

Low rates the stock "outperform" and has a target price of $35 over the next six to 12 months.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Commodities

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