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Summary
- Recently, a Royal Bank of Canada (RBC) survey revealed that 36 per cent of young Canadians (under the age of 40) have ditched their plans of buying a home.
- Finance Minister Chrystia Freeland announced in the federal budget that the government will spend an additional C$ 2.5 billion on initiatives like affordable housing over the next seven years.
- This budget allocation, which aims at helping Canadians gain wider access to affordable housing, is likely to boost real estate stocks as well.
The housing market boom in the country has forced many Canadians to give up on their dream of owning a home. Recently, a Royal Bank of Canada (RBC) survey revealed that 36 per cent of young Canadians (under the age of 40) have ditched their plans of buying a home.
On April 19, Finance Minister Chrystia Freeland announced in the federal budget that the government will spend an additional C$ 2.5 billion on initiatives like affordable housing over the next seven years.
This budget allocation, which aims at helping Canadians gain wider access to affordable housing, is likely to boost real estate stocks as well.
On that note, let’s study the recent performances two Toronto Stock Exchange-listed real estate stocks – FirstService Corporation (TSX:FSV) and Killam Apartment Real Estate Investment Trust (TSX:KMP.UN).
FirstService Corporation (TSX:FSV)
FirstService Corporation is one of the leading essential property providers in North America. According to TMX, the C$ 8.97-billion market cap company has a return on equity (ROE) of 15.53 per cent and a return on assets (ROA) of 4.03 per cent.
FirstService reported a 15 per cent year-over-year (YoY) jump in its revenue of US$ 775.1 million in 2020’s fourth quarter results. Its net earnings stood at US$ 32.9 million in the latest quarter.
FirstService’s stock grew by nearly 10 per cent over the past month, while its one-year growth stands at over 78 per cent.
One-year stock performance of FirstService Corporation (Source:Refinitiv/TR)
FirstService also distributes a quarterly dividend of US$ 0.182 and it witnessed a dividend growth at the rate of 10.5 per cent in three years. Its dividend yield stands at 0.457 per cent.
Killam Apartment Real Estate Investment Trust (TSX:KMP.UN)
Focused on the business of acquiring and developing residential apartment buildings, Killam Apartment REIT has a market cap of C$ 1.9 billion at the moment.
Killam’s stock grew by 6.6 per cent in the last three months and by 11.1 per cent in the past year. It posts an ROE of 8.75 per cent and an ROA of 4.12 per cent.
One-year stock performance of Killam Apartment (Source:Refinitiv/TR)
Killam recorded an annual property revenue of C$ 261.6 million in 2020, an increase of 8.1 per cent year-over-year (YoY). Its net income of 2020, on the other hand, was down 48.5 per cent YoY to C$ 146 million.
Killam distributes a monthly dividend of C$ 0.057 and currently has a dividend yield of 3.562 per cent.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
