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The outbreak of the pandemic in 2020 had an impact on the real estate sector as a whole with a noticeable delay in collecting rent, pause in new constructions, and increase in the vacancy rate. However, the revenue and rent collection soon returned to a pre-pandemic level, with the Canadian housing market entered a period of unprecented boom, hitting new highs earlier this year. Many analysts feared it was a ‘bubble’, and the Bank of Canada even warned of an imminent correction.
With this backdrop, we explore the stocks of three upcoming real estate companies, two of which have paid dividends or are expected to issue dividends soon. The ability to pay dividends, positive return ratios, and healthy cash balance are some of the noticeable fundamentals of these three stocks.
The Real Brokerage Inc (TSXV:REAX)
The C$ 345.57-million real estate company has 160.73 million outstanding shares. The Real Brokerage Inc (REAX) is a tech-based real estate brokerage firm on mobile platform, deriving revenue from commissions and fees.
The stock attained its 52-week high of C$ 3.66 apiece on Feb 05, 2021, and is nearly trading 41 per cent below this level, indicating more room for growth. The stock has catapulted 514 per cent above its 52-week low of C$ 0.35 (July 31, 2020) and closed at C$ 2.15 on August 3, 2021.
In the last six months, REAX stock gained 23 per cent.
The company posted revenue of US$ 9.3 million in the first quarter of fiscal 2021, up 217 per cent year-over-year (YoY). The gross profit reached US$ 1.2 million, increasing by 222 per cent YoY. However, the company incurred a net loss of US$ 3.8 million.
In March 2021, the company added 255 new agents, taking the overall count to 1895 agents at the end of Q1 FY2021. The stock holds a price-to-book (P/B) ratio of 53.75.
Canadian Net Real Estate Investment Trust (TSXV: NET.UN)
The REIT has a market cap of C$ 130.52 million. The stock closed at C$ 7.45 apiece on August 3, 2021, and is currently trading nearly 33 per cent below its 52-week low of C$ 11.11 (June 22, 2021) and 49 per cent above its 52-week low of C$ 5 apiece (August 06, 2021).
It returned 46 per cent in the past year, and however it only increased by 11 per cent YTD. On Aug 3, 2021, the scrips closed at C$ 7.45 apiece.
Revenue stood at C$ 4.45 million in Q1 FY2021, up 56 per cent year-over-year (YoY). The net income attributable to shareholders stood at C$ 0.22 million.
The real estate trust is expected to issue the next set of monthly dividends on C$ 0.025 per share, to be paid on August 31, 2021.
The stock offers dividend yield of 4.02 per cent. Its earnings per share (EPS) is 0.36 and a price-to-earnings (P/E) ratio is 20.90.
Firm Capital Apartment Real Estate Inves (TSX: FCA.UN)
Firm Capital Apartment Real Estate Investment Trust is a US-centric real estate trust dealing with income-generating multi-family residential units. It owns a total of 1,846 apartments across the US.
The company has a market cap of C$ 56.29 million and 6.94 million outstanding shares.
The stock closed at C$ 8.10 on Aug 3, 2021, and is trading nearly 15 per cent below its 52-week high of C$ 9.5 attained on June 28, 2021. The stock price climbed up by 35 per cent in the past year.
The EPS stands at 0.24 and P/E ratio of 34.10. The return on assets (ROA) is 1.42 per cent and return on equity (ROE) stands at 2.08 per cent.
The investors earned their last quarterly dividend of US$ 0.059 on July 15, 2021. The dividend yield is 3.51 per cent.
The firm posted a net loss of approximately C$2.9 million for the quarter ending March 31, 2022, a massive plunge from the net income of C$1.1 million.
The company collected approximately 92 per cent of the expected rent with an overall 6 per cent increase in average rents. The net asset value (NAV) increased to US$ 9.40 per unit.
