We’re seeing some interesting market dynamics at play, with a number of sectors seeing significant pressure as investors look to rebalance their risk/return profiles heading into a new year. Indeed, it will be interesting to see whether we do get a Santa Claus rally in December, considering that many investors may be looking to lock in capital gains this year instead of ramping up their exposure to high-profile growth stocks.
With that in mind, other sectors of the economy that have traditionally provided portfolio stability are being called into question. I think the market is trying to discern how the real estate sector will perform over the coming year, as well as the years to come. On that point, I think the jury is still out.
That said, for investors looking to stay invested in this sector in what could be a difficult period to come, here are two top TSX dividend stocks I think are worth considering right now.
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Sienna Senior Living
Among the more defensive areas of the real estate market that I think are worth considering right now is the senior living space. In this sector, Sienna Senior Living (TSX: SIA) remains a top pick of mine for those thinking long term.
The reality is that there are some strong underlying demographic shifts underway which will reshape how our real estate is utilized in the years to come. There are currently more than 5,000 Canadians retiring each and every day, and who may be looking to downsize or shift their living arrangements as they age.
Sierra Senior Living’s portfolio of quality assets in key cities around the country positions the company well to capture this growing market. In my view, this is among the top options for investors seeking upside in a real estate market that’s been choppy in recent years. Indeed, Sienna’s recent price performance could be indicative of investors buying into this trend early.
With a 4.6% dividend yield and a reasonable multiple on a historical basis, this is a no-brainer pick in the real estate sector right now, in my view.
Dream Industrial REIT
Another top real estate sector I think could have significant upside over the long term is industrial. In this space, Dream Industrial REIT (TSX: DIR.UN) is another one of my top picks I’m continuing to bang the table on.
This industrial real estate-focused REIT owns primarily warehouses and distribution centres in close proximity to key cities across North America. With a focus on both asset and tenant quality, Dream Industrial’s triple-net rent model ought to be highly sought after by investors looking for income stability over time.
I think we’re simply going to need more strategically located warehousing and distribution facilities over time. But with an emphasis in most jurisdictions to focus on residential housing, permitting and zoning regulations may mean that the current stock in place today is going to be what we’re left with for decades to come.
I’m of the view that this asset class’s upside will continue to be realized by investors buying today and holding for a long period of time. The REIT’s 5.7% yield is as attractive as its capital appreciation potential over time.
