Owning an income property is a goal many Canadians have. And why not? People always need somewhere to live, the housing market is generally always gaining in value, and it’s a great way to earn passive income. But another investment strategy that has many advantages over owning an income property is finding the top real estate stocks to buy now.
Investors can find high-quality stocks that own some of the top real estate assets across Canada. And because the business is working for you, it allows you to be a lazy landlord.
Owning an income property can be a great investment, but it can also be a lot of work. Not to mention, you’ll likely have almost no diversification, the assets don’t offer liquidity as stocks would, and transaction costs can be expensive.
When it comes to owning real estate stocks, you have a professional management team working for you. You also gain exposure to a large, diversified portfolio, there are minimal transaction costs, and tonnes of liquidity, and you hardly need any start-up capital to begin investing.
So, if you’re looking to become a lazy landlord and want to buy some of the top real estate stocks today, here are two of the best to buy now.
A top residential real estate stock to buy now
There’s no question the safest and one of the best subsectors of real estate is residential. And right now, Morguard North American Residential REIT (TSX:MRG.UN) is one of the best investments you can make.
The real estate stock owns 43 multi-suite residential properties spread across North America. 16 of those residential apartment communities are in Ontario and Alberta. The other 27 apartment communities are spread across nine different states in the U.S.
Both in Canada and the U.S., its occupancy rate is above 92%. That’s a solid and stable amount but also gives the stock plenty of room to grow.
Currently, its dividend yields roughly 4%, which is higher than many of its residential peers. Plus, it’s been increased by roughly 10% over the last four years.
In addition, the stock is also considerably cheaper than many of its peers, trading at roughly 70% of its net asset value.
So, if you’re looking to become a lazy landlord and want exposure to a high-quality portfolio of residential real estate assets, Morguard North American Residential is one of the best real estate stocks you can buy now.
A high-quality commercial REIT to buy today
If you are looking for a stock with an even higher dividend yield, True North Commercial REIT (TSX:TNT.UN) is a top business to consider.
The trust is smaller than many other real estate stocks you can buy, but it’s a high-quality company with robust operations, making it an excellent long-term investment.
True North is a real estate company that owns some of the highest-quality commercial properties across Canada. What’s attractive about the fund are its high-quality (mostly government) tenants in many of its properties.
Having such reliable tenants, of course, helps to reduce risk immensely as the cash flows it earns are quite robust. As a result, its revenue continued to rise through the pandemic, while its net income stayed resilient.
This allowed True North to continue to pay its dividend during the pandemic. And that dividend is quite attractive, currently yielding just under 8%, making it an ideal stock for high-yield dividend investors.
If you want to be a lazy landlord, you don’t have to stick with residential businesses, and True North is proof of that. So, if you’re looking for a top real estate stock to buy today, True North is certainly one of the best to consider.
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 Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool recommends MORGUARD NA RESIDENTIAL REIT UNITS.