Last month, I’d discussed how some of the major federal parties planned to tackle Canada housing ahead of the election. Each party has drawn attention to affordability and supply issues, but their respective proposals will do little to change the current environment. Investors should not sweat ahead of the September 20th election date. Today, I want to look at three housing stocks that are worth buying right now. Let’s dive in.
Why you should buy the dip in these top alternative lenders
Home Capital Group (TSX: HCG) is one of the largest alternative lenders in Canada. Shares of this housing stock have climbed 21% in 2021 as of close on September 9. However, the stock has dropped 3.2% over the past month.
The company unveiled its second-quarter 2021 results on August 13. Adjusted net income rose 14.3% from the prior year to $73.9 million, or $1.44 per share. Home Capital posted mortgage originations of $2.13 billion — up a whopping 42% from the second quarter of 2020. Single-family mortgage originations climbed to $1.83 billion compared to $1.33 billion.
Shares of this housing stock last had a very attractive price-to-earnings (P/E) ratio of 7.7. Now is a great time to jump on the dip.
Equitable Group (TSX: EQB) is another top alternative lender. Its shares have increased 44% in the year-to-date period. The stock has been in a holding pattern over the last month and is still down from its peak in the first half of August.
Investors got a look at its second-quarter 2021 results on July 28. The company reported net earnings of $70.8 million or $4.05 per share — up 35% and 33%, respectively. Its EQ Bank posted customer growth of 79% to 222,000, and deposits increased by more than 99% to over $6.5 billion. Moreover, loans under management rose 9% year over year to $35.4 billion. Single-family alternative loan originations increased over 200% from the prior year to $1.8 billion. Meanwhile, reverse mortgage originations surged 318% to $45 million.
The strong quarter spurred the company to raise its 2021 outlook. It now expects EQ Bank deposit growth between 30% and 50% and loan growth between 8% and 12%. This housing stock possesses a favourable P/E ratio of 9.2. Moreover, it offers a quarterly dividend of $0.37 per share. That represents a modest 0.9% yield.
One more Canada housing stock to snatch up in September
Bridgemarq Real Estate (TSX: BRE) is an Ontario-based company that provides services to residential real estate brokers and REALTORS across Canada. Investors who want a housing stock that boasts strong income should look no further. Shares of Bridgemarq have increased 13% in 2021. The stock is down nearly 1% month over month.
In Q2 2021, the company delivered revenue growth of 22% to $14.0 million. Net earnings came in at $0.9 million, or $0.22 per share — up from a loss of $9.2 million in the second quarter of 2020. Best of all, its board of directors declared a monthly distribution of $0.1125 per share. That represents a monster 8% yield.
