5 Canadian real estate stocks to buy under $100

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5 Canadian real estate stocks to buy under $100

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 5 Canadian real estate stocks to buy under $100
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Highlights

  • One of the real estate companies mentioned here acquired 5,000 new single-family homes through a joint venture with two institutional investors.
  • Among them, the highest ROE was 20.11 per cent.
  • These companies have dividend-paying histories, and the highest five-year dividend growth rate among them stands at 4.2 per cent.

As per the US Federal Reserve’s (Fed) latest quarterly exuberance index data that shows country-wide housing bubbles, Canada has undoubtedly entered a bubble. But the challenge is to determine whether it is a long-term or short-term bubble.

Some of the market analysts believe that the Canadian housing market stands without a correction in real estate prices over the past six years. The fear is that if the bubble bursts, it may create havoc and panic and damage the Canadian economy.

Canadian real estate prices are believed to be based on emotions more than on fundamental factors. Academic research says that a prolonged and long-lasting bubble can create dangerous corrections.

On that note, let us look at some of the Canadian real estate stocks.

  1. Altus Group Limited (TSX: AIF)

Altus provides real estate consulting and real estate analytical solutions. The company earns most of its revenue from its commercial real estate consulting division.

The company has a dividend-paying history, with the latest quarterly dividend of C$ 0.15 per share paid on July 15, 2021. The dividend yield stood at 0.89 per cent on September 13, 2021. Moreover, Altus Group held earnings per share (EPS) of 0.78, return on equity (ROE) of 8.47 per cent on the same day.

In the second quarter of the fiscal year 2021, Altus Group posted consolidated revenue of C$ 173.5 million, increased by 11.6 per cent Year-over-Year (YoY). Its debt was C$ 248.8 million in the same quarter and C$ 74.1 million of cash and cash equivalent.

The stock price of the real estate company expanded by 24 per cent over the past year, which closed at C$ 67.36 on September 10, and reached its 52-week high of C$ 68.17 on August 13, 2021.

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  1. DREAM Unlimited Corp. (TSX: DRM)

The real estate company develops residences and offices in Toronto and runs an asset management business. DREAM Unlimited also develops residential assets and land-based assets in Western Canada.

As per the latest quarterly report, DREAM Unlimited started constructing Brighton Village Central Rental II, a 141-apartment developmental project in Saskatoon, in Q2 FY21. The company posted total revenue of C$ 79.66 million and a net margin of 15.7 per cent in the same quarter.

A new residential building and a 15-story building with 162 residential units have commenced in Q2 FY21.

The real estate company is expected to roll out quarterly dividends of C$ 0.07 on September 30, and the dividend yield was 1.032 per cent on September 13. Furthermore, on this date, DREAM Unlimited held a market cap of C$ 1.14 billion and a price-to-book (P/B) ratio of 0.88.

On September 10, the stock price of DREAM Unlimited closed at C$ 27.12 and traded one per cent below its 52-week high of C$ 27.49 (August 3, 2021) on the same day. The one-year stock return was close to 37 per cent.

Also Read: 5 best real estate stocks to buy in Canada

  1. Tricon Residential Inc. (TSX: TCN)

The C$ 3.36 billion market cap company on September 13 is a real estate firm that provides rental housing to the US and Canadian population. Tricon Residential caters to both single-family and multi-family rental homes.

In the last six months, the stock price of Tricon spiked up by 30 per cent and also expanded by 43 per cent over the past year. It closed at C$ 16.03 on September 10.

In Q2 FY21, the company posted single-family rentals net operating income growth of 5.5 per cent YoY. Its same home occupancy rate increased by 0.1 per cent YoY to reach 97.6 per cent in the same quarter. The net income from continuing operations of Tricon Residential was US$ 146.3 million in Q2 FY21.

The senior leadership of Tricon Residential commented that in Q2 FY21, it acquired 5,000 new single-family homes through a joint venture with two institutional investors.

On the valuation metrics, the real estate company posted a price-to-earning (P/E) ratio of 9.7, ROE of 13.88 per cent, and ROA of 3.69 per cent. While the company is expected to pay a quarterly dividend of C$ 0.07 on October 15, 2021. Over the five years, the dividend grew on an average at a rate of 2.09 per cent.

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

  1. Granite Real Estate Investment Trust (TSX: GRT.UN)

The real estate company deals in warehouse, logistics, and manufacturing-based properties in Europe and North America. Granite Real Estate held a market cap of C$ 6.08 billion and 65.68 million outstanding shares on September 13.

The company's stock price closed at C$ 92.7 on September 10, which traded 29 per cent above its 52-week low of C$ 71.66 (February 25, 2021). On a year-to-date (YTD) basis, the stock returned close to 19 per cent and 22 per cent over the past year.

The company posted a net operating income of C$ 80.3 million in Q2 FY21, up from C$ 71.2 million in Q2 FY20. Its funds from operations were C$ 62.2 million in the same quarter.

On September 13, the dividend yield of the company was 3.23 per cent, and on September 15, the company is set to pay a monthly dividend of C$ 0.25 to its shareholders. Its five-year dividend growth stood at 4.2 percent.

The ROE of Granite Real Estate was 20.11 per cent, ROA of 12.71 per cent, debt-to-equity (D/E) ratio stood at 0.48 (at the time of writing).

  1. Canadian Apartment Properties Real Estate Investment Plan (TSXV: CAR.UN)

The real estate investment trust acquires residential homes located in major urban areas across Canada. Canadian Apartment Properties provides leases and holds a portfolio of apartments and townhouses.

The REIT is set to roll out a monthly dividend of C$ 0.121 per share payable on September 15, 2021. The dividend yield was 2.36 per cent.

On a quarter-to-date (QTD) basis, the stock price of Canadian Apartment Properties returned five per cent and returned 40 per cent over the past year. It closed at C$ 61.3 on September 10.

The real estate trust held a P/E ratio of 7.9, ROE of 14.75 per cent and ROA of 8.71 per cent (at the time of writing).

Bottom line:

As emotions change faster than the fundamentals of a company and sector, the possibility of irrational behavior can have a spiral effect on the real estate sector.

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