There’s no question that Canadian REITs are some of the best investments to buy and hold long-term. Indeed, top real estate stocks in the country can be some of the best businesses you can buy for your portfolio.
Real estate has always been a popular industry for investors. It has been favoured for decades and will continue to be one of the most important industries going forward for several reasons.
Firstly, most real estate is highly defensive, especially residential real estate. Furthermore, real estate properties can generate significant passive income for investors, but they can also see significant capital gains as well.
So, it’s not surprising that whether investing through the stock market or rental properties, the real estate industry is a favourite among Canadians.
Plus, in Canada investors have a tonne of choices when it comes to finding some of the top real estate stocks to buy. So, even if you don’t have enough cash for a down payment on a rental property, you can still put your hard-earned money to work in the real estate sector and begin generating passive income for yourself right now.
So, with that in mind, if you’re looking for top Canadian real estate stocks to buy now, here are two of the best.
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One of the top residential real estate stocks to buy now
As I mentioned above, residential real estate is one of the most defensive industries in which you can invest. However, it’s also one of the best industries to invest in for long-term growth.
That’s why if you’re looking for top real estate stocks to buy now, Canadian Apartment Properties REIT (TSX: CAR.UN), the largest residential REIT in Canada, is one of the best.
CAPREIT, as it’s known, owns a massive portfolio of residential real estate properties all over the country. Not only is residential real estate highly defensive and recession resistant, but because CAPREIT’s operations are well diversified, it helps to mitigate even more risk.
Furthermore, having so much diversification also improves its growth potential. It not only gives CAPREIT exposure to more regions across the country, but also more choices when it comes to upgrading its existing properties in order to drive its rental revenue higher.
Therefore, while CAPREIT still trades off its highs at a forward price-to-adjusted-funds-from-operations (P/AFFO) ratio of just 22.5 times, below its five-year average of 24.8 times, and while it offers a yield of roughly 3%, it’s certainly one of the top real estate stocks in Canada to buy right now.
One of the best industrial REITs in Canada
Although residential real estate is certainly the most defensive subsector of the real estate industry, there are plenty of other Canadian REITs that provide both compelling passive income generation as well as long-term growth potential, such as Granite REIT (TSX: GRT.UN), an impressive industrial REIT.
Industrial REITs like Granite have significant long-term growth potential thanks in large part to a consistently changing economy that’s seeing e-commerce continue to boom and retailers consequently needing more space to store inventory.
It’s no surprise that as more retailers offer online shopping and more shipping companies compete to deliver our goods faster, e-commerce is becoming much more convenient, and the industry continues to boom.
This is creating significant demand for distribution centres and warehouse space, especially as some retailers elect to close some of their brick-and-mortar locations as the economics of e-commerce improve.
In fact, in just the last five years, Granite’s revenue has grown at a compounded annual growth rate (CAGR) of 16.1%, and its funds from operations have increased at a CAGR of 13.5%, both of which are impressive growth rates showing why Granite is one of the top real estate stocks to buy now.
Furthermore, Granite’s P/AFFO ratio is just 16.5 times today, below its five-year average of 19.2 times, showing the value it offers investors today. Not to mention, it also offers a forward yield of roughly 4.2% today, which is above its five-year average of 4%.
So, if you have cash today and are looking for top real estate stocks to buy now and hold for years or even decades to come, there’s no question that Granite is one of the best to consider.
