5 best real estate stocks to buy in Canada

Highlights

• One of the real estate stocks discussed here posted an average rent collection rate of 98 per cent as compared to its pre-pandemic level.
• Three of the below-mentioned stocks recently paid dividends to their shareholders, and their highest five-year dividend growth rate stood at 9.76.
• These companies seem to be gradually returning to their pre-pandemic levels.

Following the announcement of the upcoming federal elections, the Canadian government has introduced a revised housing plan. Believed to be constructed in an effort to boost Prime Minister Justin Trudeau’s election prospects, the plan promised increased housing supply, ban on foreign buyers, etc. to curb inflated home prices.

Some market experts believe it will adjust the demand and supply mismatch and fetch fairer housing prices.

On that note, let us explore the top five real estate stocks in Canada.

1. Colliers International Group Inc. (TSX: CIGI)

Colliers operates in 60 countries, providing real estate capital solutions to investors and other market research and consulting services. Colliers International Group Inc. held a market cap of C$ 7.38 billion and outstanding shares of 43.98 million on August 23, 2021.

On August 4, 2021, the stock price reached its 52-week high of C$ 179.96, and on August 23, 2021, it closed at C$ 167.83 apiece. Over the past year, the stock price rocketed nearly 102 per cent.

The real estate company paid a semi-annual dividend of US$ 0.05 per share on July 14, 2021, to its investors. The price-to-book (P/B) ratio was 11.24 on August 23, 2021.

Colliers International posted revenue of US$ 946 million in the second quarter of the fiscal year 2021, up from US$ 550.2 million in Q2 FY20.

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2. Mainstreet Equity Corp. (TSX: MEQ)

This C$ 1.12 billion market cap real estate company acquires and redevelops multi-family homes in three different provinces of Canada. The investors of Mainstreet Equity Corp. have enjoyed earnings per share (EPS) of 25.06 and an ROE of 26.03 per cent posted on August 23.

Stocks of Mainstreet Equity closed at C$ 119.84 on August 23. Over the past year, the stock price expanded by roughly 53 per cent.

Mainstreet Equity Corp. posted revenue of C$ 39.94 million in Q3 FY21. During the quarter, the average rent collection rate stood at 98 per cent.

The senior management of the real estate company commented that during the pandemic, the domestic student population and immigrants reduced as the Canadian border was closed, which affected the housing market.

Also Read: 2 Real Estate Stocks To Buy Following Budget 2021’s Housing Allocation

3. FirstService Corporation (TSX: FSV)

FirstService has been regarded as one of the top real estate companies by the TMX group. The C$ 10.48 billion market cap company manages high and mid-rise condominiums, generating significant revenues from the US.

FirstService paid its shareholders quarterly dividends of US$ 0.182 per share on July 7, 2021. The five-year dividend grew at 9.76 per cent on average, while the company's dividend yield stood at 0.37 per cent on August 23.

The stock price of FirstService closed at C$ 238.83 on August 23. The stock price reached its 52-week high of C$ 241.26 on August 20, 2021. It returned 37 per cent on a year-to-date (YTD) basis.

FirstService Corporation posted revenues of US$ 831.6 million in Q2 FY21, up from US$ 621.6 million in Q2 FY20. Its adjusted EBITDA was US$ 89.9 million in the same quarter.

The valuation parameters of the real estate scrip highlighted a price to earnings (P/E) ratio of 74, an ROE of 16.69 per cent, and an ROA of 5.09 per cent.

Also Read: 3 junior real estate stocks to buy in 2021

4. Altus Group Limited (TSX: AIF)

Altus Group is a real estate advisory firm based in Canada. It also provides data solutions and other services to its real estate clientele. The acquisition of Finance Active during Q1 FY21 contributed to higher revenue growth as per the management’s commentary.

Altus posted consolidated revenue of C$ 173.5 million in Q2 FY21, increasing by 11.6 per cent Year-Over-Year. Its consolidated profit was C$ 16.3 million in the same quarter.

The real estate company held a market cap of C$ 2.72 billion and posted an EPS of 0.78, an ROE of 8.33 per cent, and its debt-to-equity (D/E) ratio stood at 0.79 on August 23.

The investors were issued a quarterly dividend of C$ 0.15 on July 15, 2021. 

At the market’s close, stocks of Altus were priced at 65.20 on August 23 and increased by 34 per cent over the past year.

5. The Real Brokerage Inc. (TSXV:REAX)

This company raised its initial public offering (IPO) and got listed on the TSX Venture Exchange on June 25, 2018. It stood with a market cap of C$ 436.9 million and 178.04 million outstanding shares on August 23.

The stock price of REAX traded roughly 33 per cent below its 52-week high of C$ 3.66 (February 5, 2021) and closed at C$ 2.45 on August 23.

The company's stock price rocketed nearly 158 per cent over the past year, whereas on a YTD basis it climbed up by almost 108 per cent.

The Real Brokerage Inc. posted a revenue of US$ 23 million in Q2 FY21, up 790 per cent YOY.  Its net operating loss was US$ 2.9 million in the same quarter. The company launched its operations in the Indiana region.

Bottomline

The new housing policy seeks to increase the supply of houses and put a temporary halt to foreigners buying homes, thereby stabilizing the skyrocketing housing prices. This could make buying houses a more accessible option for many Canadians.