REITs, or real estate investment trusts, are popular investment options among dividend investors. And it is easy to see why — these real estate stocks usually boast above-average dividend yields, and several of them have distributed growing income for decades consistently.
Among the various real estate plays on the Toronto Stock Exchange, I believe these three are worth grabbing right now.
Top real estate stocks: Boardwalk REIT
Alberta-based Boardwalk REIT (TSX: BEI.UN) is a company that’s been under pressure in recent years. However, oil prices are rebounding, and many new technology firms are announcing expansion into the Edmonton and Calgary markets. This has changed the outlook for Boardwalk’s NOI.
I think this REIT’s occupancy trajectory is solid and is likely to improve alongside the company’s projections (to 97% this year). For investors looking for REITs with upside, this is an excellent way to gain exposure to this sector.
Of course, this REIT isn’t without risk. However, those bullish on the Western Canadian economy may want to take a peek at this real estate stock.
Dream Industrial REIT
Dream Industrial REIT (TSX: DIR.UN) focuses on “last-mile” urban logistics space. And as consumers shift to a sustained rise in online shopping on a long-term basis, this focus looks well-suited to satisfy the increasing needs of e-commerce distribution.
Accordingly, Dream Industrial is one of the top real estate stocks I’m watching right now. On a constant-currency basis, the REIT’s same-property NOI rose by 7.5% year over year this past quarter. Pricing power continues in historically tight supply-demand circumstances.
With interest rates of Europe staying anchored well below that of North America, this REIT gains from a relative borrowing advantage. Accordingly, I think this 4.3%-yielding REIT is one to think about right now.
Storage Vault Canada
The investment thesis for Storage Vault Canada (TSX: SVI) is based on two major principles. One, a lucrative cash flow profile that is high-growth and low in maintenance capital. And two, the capability to accretively consolidate the ownership base of the industry.
The company’s Q3 results reflected this high-growth cash flow profile — same-property revenue rose 23% year over year and free cash flow or AFFO grew 46%.
StorageVault’s leases have a month-to-month nature. This allows it to increase rents in response to the present inflationary environment much quicker than traditional property types having longer-term leases.
Canada has got around 70% less storage space per capita than the United States. This is a key factor underlying StorageVault’s solid rent growth profile. Also, this free cash flow is utilized for ownership consolidation within the industry.
