My thinking is similar to yours, except that I like to look, not just at the static yield snapshot, but rather of the rate of change in the prospective yield.
One of the major appeals to my investment thesis for TCL is the growth in Free Cash Flow, and hence, distributions, over the coming years.
For example, on my modelling, the company will be in a position to distribute 68c per share by 2019 (and even that will be accompanies by more than a 2 point fall in the Net Debt-to-EBITDA metric)
Capitalising a 68c distribution at your 5.5% cap rate would yield a two-year share price of $12.40.
That translates into 10%pa compound annual capital growth, plus 5%pa distribution, for 15% pa total shareholder return.
In my mind, that is an attractive risk-adjusted, real return.
TCL Price at posting:
$9.81 Sentiment: Buy Disclosure: Held
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