Global diversification and sector balance should be a goal for your RRSP portfolio, but that can prove a challenge for Canadian investors as the TSX Index is dominated by companies operating in a few industries.
Fortunately, attractive options do exist. Let’s take a look at two Canadian stocks that can help investors get exposure to global opportunities without taking on the risks connected with making direct international investments.
Brookfield Property Partners (TSX: BPY.UN)(NASDAQ:BPY)
Have you ever dreamed of owning a world-class office building in a tier-one city?
This is the type of asset held by Brookfield Property Partners, the real estate investment vehicle for Brookfield Asset Management.
The company owns 142 office properties, 124 retail locations, and a portfolio of other real estate assets that include student housing, hospitality, self-storage, industrial, multifamily, and logistics properties.
The holdings are spread out around the world, giving investors exposure to North and South America, Europe, the Middle East and Asia. Brookfield Property Partners targets 10-12% total return at its core office and retail assets, which are trophy properties in strategic locations and represent 80% of the Brookfield Property Partners balance sheet.
The LP investments are focused on portfolios and properties that should deliver significant value growth. The company targets a 20% total return in this group, which represents about 20% of the balance sheet.
The board’s goal is to maintain 5-8% annual distribution growth supported by reliable cash flow from a solid and diversified asset portfolio. Management is also willing to divest properties when the right offers are presented. For example, the company monetized $8 billion in assets in 2018 for net proceeds of $3.6 billion.
The board just raised the quarterly distribution from $0.315 per unit to $0.33. At the time of writing, that’s good for a yield of 4.5%.
Sun Life Financial (TSX: SLF)(NYSE: SLF)
Sun Life owns and operates insurance, wealth management, and asset management businesses in Canada, the United States, the UK, and Asia.
After the Great Recession, Sun Life sold its U.S. annuities business to remove risk from the company and has targeted new investments at building up a real estate investment group. The division continues to grow through acquisitions and should provide attractive revenue as it expands in the coming years.
Investors with a long-term outlook should be interested in Sun Life’s Asia operations. The company has a presence in key markets, including India, China, and the Philippines. As middle-class wealth expands, Sun Life should benefit from rising demand for insurance products.
The company resumed dividend growth in recent years – – a trend that should continue. The current payout provides a yield of 3.7%.
The bottom line
Brookfield Property Partners and Sun Life offer RRSP investors an opportunity to gain access to global opportunities through stable Canadian companies that pay attractive distributions. An equal investment in the two companies would provide an average yield of better than 4%.
