Business Daily
No Result
View All Result
Saturday, March 25, 2023
  • Login
  • Home
  • Business
  • World
  • Investment
  • House
Subscribe
Business Daily
  • Home
  • Business
  • World
  • Investment
  • House
No Result
View All Result
Business Daily
No Result
View All Result
Home House

Real Estate Investing in Stocks: Do You Seek Income or Growth?

by Smith
2022年9月7日
in House
0
152
SHARES
1.9k
VIEWS
Share on FacebookShare on Twitter
growing plant shoots on stacked coins

Written by Kay Ng at The Motley Fool Canada

When investing in real estate, many Canadian investors may first think of its income generation potential. A Canadian real estate investment trust (REIT) ETF, iShares S&P/TSX Capped REIT Index ETF , yields 3.77% at writing. This is income that’s 24% higher than the yield currently provided by the Canadian stock market using iShares S&P/TSX 60 Index ETF as a proxy.

REITs for income

Canadian investors commonly consider real estate investment trusts (REITs) for current income. One of iShares S&P/TSX Capped REIT Index’s highest-yielding holdings is NorthWest Healthcare Properties REIT ( TSX:NWH.UN ). The global healthcare REIT is positioned to grow, as its tentacles stretch across eight countries, including geographies such as Canada, Brazil, Europe, the United Kingdom, Australia, and New Zealand. It generates rental income from hospitals, other healthcare facilities, and medical office buildings.

Its diversified real estate portfolio is defensive, maintaining a high occupancy of about 97%, across more than 2,100 tenants. Additionally, approximately 82% of its rents are indexed to inflation, which is critical in today’s high inflationary environment. Moreover, it has a weighted average lease expiry of 14 years. Combined, it means the REIT’s cash flows are high quality.

The healthcare REIT yields over 6.2%. This yield is relatively high versus what the industry offers. Investors can therefore assume that most returns in a NWH.UN stock investment will likely come from its monthly cash distribution. At $12.82 per unit, the analyst consensus 12-month price target represents near-term upside potential of 13%. So, investors who need passive income could consider buying some units at current levels. If you prefer more of a discount, see if the stock will fall to about $12 over the next six to 12 months.

By building a position in your Tax-Free Savings Account , you can earn tax-free monthly income!

Real estate stocks for growth

Some real estate stocks are better for growth. For example, investors would have missed FirstService ( TSX:FSV )( NASDAQ:FSV ) if they have their eyes set for income, because the real estate stock only yields about 0.6%. However, interestingly, it has outperformed the sector. Moreover, it’s a Canadian Dividend Aristocrat with an above-average five-year dividend-growth rate of 10.7%.

Companies that are able to grow at a high rate consistently ultimately lead to greater total returns primarily from price appreciation. Indeed, of the three securities shown below, FirstService have indeed achieved the highest total return of almost 17.9% annually in the last 10 years. An initial investment of $10,000 transformed to $51,840 in the period.

FSV Total Return Level Chart
FSV Total Return Level Chart

XRE, NWH.UN, and FSV Total Return Level data by YCharts

FirstService compounded its revenue at a compound annual growth rate of 19% in the past three years. Its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), a cash flow proxy, rose at a similar rate in the period, while its adjusted earnings per share increased by over 20% per year.

FirstService is North America’s largest provider of residential property management services. It also provides essential property services to residential and commercial customers through franchise systems and company-owned operations. The company enjoys growth organically and from acquisitions. From 2015 to 2021, its annual average organic growth was 7%.

The growth stock’s correction of about 36% from its 52-week high could be a fabulous buy. Currently, analysts think the real estate stock can climb more than 16% over the next 12 months. Longer-term investments can be even more lucrative!

The post Real Estate Investing in Stocks: Do You Seek Income or Growth? appeared first on The Motley Fool Canada .

Should You Invest $1,000 In Firstservice Corporation?

Before you consider Firstservice Corporation, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2022 … and Firstservice Corporation wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 27 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks

* Returns as of 8/8/22

More reading

  • 15 Top Stock Picks for 2022
  • 14 Top TSX Stock Picks for January 2022
  • 3 Canadian Stocks to Buy for Monthly Passive Income
  • TFSA Passive Income: How to Earn $346 Per Month Tax Free for Life
  • 4 Cheap Canadian Stocks That You Can Buy Under $30
  • Two New Stock Picks Every Month!

Fool contributor Kay Ng has no position in any of the stocks mentioned. The Motley Fool recommends FirstService Corporation, SV and NORTHWEST HEALTHCARE PPTYS REIT UNITS.

2022

Tags: real estate

Have a look

Recent Articles

  • Is it Wise to Retain Jones Lang LaSalle (JLL) Stock for Now?
  • Stock market news live updates: Stocks slide into long weekend after forfeiting post-jobs report gains
  • ETH leads crypto market cap above $1 trillion as markets rally after jobs data
  • The Power Play by The Market Herald Releases a New Interview with Giga Metals Discussing Their Latest News
  • The stock market could still rally to new highs by the end of the year as plunging oil prices help tame inflation, Fundstrat’s Tom Lee says

Categories

  • Business
  • House
  • Investment
  • World

Site Navigation

  • About
  • Contact
  • cookie-policy
Business Daily

Share the latest business news every day.

No Result
View All Result
  • Home
  • Business
  • World
  • Investment
  • House

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In