NorthWest Healthcare Properties REIT (TSX: NWH-U, OTC: NWHUF), a recent addition to the Dividend Champions Portfolio, reported very good results for the final quarter of 2016.

Adjusted funds from operations per unit, a reasonable estimate of profits, increased by 11% year over year, while the distribution per unit was kept unchanged. The net asset value per unit grew 13% from a year ago.

The year was rather eventful for the real estate investment trust (REIT), with a core focus on the consolidation of the platform established by the 2015 merger with NorthWest International REIT. As part of this integration, C$125 million of non-core Canadian properties were sold, while C$500 million was invested in acquisitions or new developments.

Despite all the merger-and-acquisition activity, the balance sheet remains in decent shape, with debt-to-gross book value improving 4 percentage points from a year ago, to 52%. However, lower leverage was achieved by issuing additional equity, which dilutes profits for unitholders.

Operationally, the trust had a good year, with occupancy improving by 1.3 percentage points, to 95.6%, while the weighted average lease term increased by 1.5 years, to 11.1 years. Same-property net operating income, another key metric, grew 7% during the year, largely driven by inflation indexation on the REIT’s international portfolio.

This year, management plans to continue executing development and expansion projects, as well as more acquisitions. This suggests there will be additional equity and debt issues, which may keep a lid on unit-price appreciation.

The REIT has an attractive dividend yield of 7.6%, while the payout ratio improved more than 7 percentage points from a year ago, to 93%. We estimate NorthWest Healthcare’s fair value at C$14, or US$11.

Fourth-quarter results for pipe-coatings provider ShawCor Ltd. (TSX: SCL, OTC: SAWLF) did not make for very pleasant reading. Earnings per share fell 13% year over year, along with significant declines in revenue and gross profit. However, this was a much better performance than the third quarter, when the company posted a loss.

On a positive note, management reported signs of improving demand, as evidenced by a 44% increase in the order book compared to the beginning of 2016. The doubling in North American oil-and-gas drilling activity since the second quarter also bodes well for an ongoing improvement in new orders for gathering pipeline services.   

The normally conservative management said the company is expected to deliver “strong growth” in 2017.

Debt was substantially reduced in the fourth quarter after the company raised $173 million through an equity issue. The balance sheet is now only lightly levered, with a debt-to-capital ratio of 8%. Cash flow for 2016 was much lower than the prior year, but still sufficient to cover capital expenditures and the dividend.

There are better days ahead for the company. Shares of ShawCor currently yield 1.6%, and we estimate the stock’s fair value at C$34, or US$25.

Earnings Season Checklist

We’re nearing the end of earnings season for the calendar fourth quarter. The table below lists the date for each company’s earnings release, as well as the expected dividend. Rows that have been highlighted green indicate companies that have already reported results.