Real estate investment trusts (REITs) haven’t done so well this year. Investors continued to be fearful about the future of the market, with the TSX today remaining down by 9% from 52-week highs.
That being said, there have been some major improvements, leading to some investors becoming more positive about the future of the market. In fact, there continues to be an improving outlook for several REITs, ones that can still bring in value and dividends for investors.
Today, let’s look at three REITs that continue to show strength in both their balance sheets as well as high yields.
Choice Properties
Choice Properties REIT (TSX: CHP.UN) is a strong option for several reasons. The REIT continues to hold Loblaw as its main tenant, providing not just stable income but growing income as well, given the company continues to open and renovate new locations.
What’s more, Choice REIT is known for its mixed-use properties. Residents can live, work, and shop all in one location, providing multiple sources of income. After seeing free cash flow drop during the pandemic, it’s now climbing back to where it was back in 2019. So all in all, this REIT remains a solid choice for investors.
Yet shares of Choice REIT remain down by 10% year to date, with the company trading at 15.62 times earnings as of writing. This is more valuable than its largest competitors, making it a steal on the TSX today. Finally, you can pick it up with a dividend yield of 5.6% as of writing.
CAPREIT
Apartments and rentals have also seen more interest, but perhaps not by investors quite yet. Canadian Apartment Properties REIT (TSX: CAR.UN) still offers value and growth for investors looking to buy and hold for the next decade and beyond.
CAPREIT in particular has a diversified set of rental properties across both Canada and Europe. And again, after a minor dip during the pandemic, its free cash flow continues to rise, now at $262,560 million in 2022.
Shares are actually up quite a lot — up 19% year to date for the stock as of writing. Even so, it offers growth, as the company continues to expand its operations, as well as dividends through a 2.92% dividend yield. As one of Canada’s largest property owners, it’s therefore a strong contender for those seeking sustained growth even during this downturn.
Dream Industrial REIT
The market may have turned its back on e-commerce, but the economy certainly hasn’t. Industrial properties therefore remain a strong choice for those looking for growth from REITs these days. These properties need little maintenance, usually only need one tenant, offer long-term lease agreements, and are in huge demand.
This is why Dream Industrial REIT (TSX: DIR.UN) is another solid option. Dream stock provides more growth, as companies look for industrial properties to assemble and store their products. The problem is that Dream REIT has seen its free cash flow drop over the last few years, reaching lows not seen since the pandemic. Even so, it looks like it’s using the cash wisely through buybacks that keep investors interested.
Dream REIT now trades at 17 times earnings, as of writing, with a dividend yield of 5.12%. Shares are also up about 27% as of writing year to date. So, this might be a good buy-and-hold scenario, especially as industrial properties continue to see growth. But I wouldn’t say it’s the best deal of the batch.
