There was considerable uncertainty surrounding Canada housing back in the spring. At the time, I’d suggested that investors should continue to have faith in what has been one of the strongest sectors in Canada over the past decade. Today, I want to discuss what stocks investors can jump into if they have some extra cash to play with in the middle of August.
Why you should invest $2,000 in Canada housing stocks
Activity in the Canada housing market has rebounded with a vengeance in the summer. Toronto and Vancouver, the largest metropolitan areas in the country, have seen real estate markets surge in June and July. In Toronto, sales jumped 30% year over year to 11,081 homes. Meanwhile, the average selling price increased 17% to a record $943,710. In Vancouver, sales rose 22% to a record 3,128 homes.
Because of this, I’m bullish on Equitable Group (TSX:EQB). This top alternative lender has been a reliable housing stock in recent years. Its shares have climbed 26% over the past three months as of close on August 11. In late July, the company said that mortgage deferrals had fallen significantly from their peak levels. This is a great sign going forward.
Better yet, Equitable Group stock last had a price-to-earnings (P/E) ratio of 7.7 and a price-to-book (P/B) value of one. This puts it in very attractive value territory.
This real estate stock pays a monster dividend
In June, the CMHC announced that it would tighten lending rules in response to the turbulent economic situation. There were fears that this could torpedo the housing comeback before it began. At the time, I was still bullish on the housing market and the housing stock Bridgemarq Real Estate (TSX:BRE).
Bridgemarq provides services to residential real estate brokers and REALTORS in Canada. Its shares have surged 48% over the past three months at the time of this writing. In the second quarter of 2020, the company reported revenue of $11.4 million compared to $11.8 million in the prior year. This was to be expected with a slower market in the spring. However, the company is on track for a big third quarter as activity has picked up nicely.
Shares of Bridgemarq last possessed a favourable P/E ratio of 14. It still offers a monthly distribution of $0.1125 per share, which represents a tasty 10% yield. This housing stock is undervalued and boasts a monster dividend. It is well worth targeting, as real estate activity has boomed in the summer.
This housing stock is a dividend all-star
Genworth MI Canada (TSX:MIC) is a top private residential mortgage insurer in Canada. It is also one of the most dependable dividend stocks on the TSX. This is a housing stock you can rely on for the long term.
Shares of Genworth have increased 16% month over month. The stock last had a very favourable P/E ratio of eight and a P/B value of 0.9. Genworth offers a quarterly dividend of $0.54 per share. This represents a strong 5.7% yield. The company has delivered dividend growth for over a decade.
On the topic of stocks to spend your cash on in the summer . . .
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.