Top 5 Canadian REIT stocks to buy for a recession

Highlights

  • The ongoing energy crunch along with inflation could lead the economy towards a recession.
  • One of the REIT stocks listed here rocketed by nearly 62 per cent in the past year.
  • A REIT stock among them held a dividend yield of 4.261 per cent, on Monday, October 18.

Rising energy prices and overall consumer price inflation could impact the spending spree that induced the economic rebound of 2021. As the pandemic rules are coming to an end, many hard-hit sectors are planning to regain normalcy in the market.

However, many analysts believe that the ongoing energy crunch along with multi-year high oil and gas prices might lead the economy towards a recession. In addition, it might take time to loosen up the global supply chain bottlenecks which may fuel inflation for months.

Furthermore, the spread of the COVID-19 virus in the unvaccinated groups might cause setbacks adding to the possibility of an economic recession.

At such uncertain times, many investors may prefer to invest in resilient REIT (Real Estate Investment Trust) stocks as the real estate industry is more shielded and could fetch stable returns in the long run.

Also read: 3 Canadian IPOs to get very excited about!

On that front, let us look into some of the Canadian REIT stocks listed on the Toronto Stock Exchange (TSX).

5 TSX-listed REIT stocks for a recession

1.    H&R Real Estate Investment Trust (TSX:HR.UN)

The stock of the Canadian real estate owner and operator H&R Real Estate Investment Trust was trading down by 0.304 per cent at C$ 16.38 apiece, on Friday, October 15. At this closing price, it was more than four per cent below its 52-week high of C$ 17.15 scored on August 3.

Its stock jumped nearly 62 per cent in the past year and climbed more than 23 per cent on a year-to-date (YTD) basis. It surged almost 30 per cent in the last nine months.

Image description: H&R Real Estate Investment Trust (TSX:HR.UN)’s stock performance

With a market capitalization of C$ 4.72 billion, H&R held a price-to-earnings (P/E) ratio of 7.70, a price-to-book (P/B) ratio of 0.765, a price-to-cash flow (P/CF) ratio of 11.10 and a debt-to-equity (D/E) ratio of 0.99, on Monday, October 18.

H&R had a return of equity (ROE) of 10.25 per cent, a return on assets (ROA) of 4.73 per cent and a dividend yield of 4.212 per cent on this day.

The Toronto-headquartered REIT is expected to pay a monthly dividend of C$ 0.058 per share to its shareholders on November 5.

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

The scrip of the C$ 6 billion market cap holder Granite Real Estate Investment Trust touched its 52-week high of C$ 96.38, on Thursday, October 14.

On October 15, Granite’s scrip wrapped up trading more than one per cent below its 52-week peak at C$ 95.28 apiece, up by 0.137 per cent. Its scrip surged by almost 25 per cent in the past year and grew by more than 22 per cent on a YTD basis. Its scrip increased more than 10 per cent in the last three months and expanded nearly four per cent in the last week.

Granite had an earnings per share (EPS) of 12.86, a P/E ratio of 7.40, a P/B ratio of 1.358, a P/CF ratio of 24.70 and a D/E ratio of 0.48, at the time of writing. In addition, it posted an ROE of 20.11 per cent, an ROA of 12.71 per cent and a dividend yield of 3.149 per cent.

Also read: Top 5 TSX value stocks to buy

3.    Allied Properties Real Estate Investment Trust (TSX:AP.UN)

The urban office-focused Allied Properties Real Estate Investment Trust witnessed its stock trading down by 0.169 per cent and priced at C$ 41.30 apiece on October 15. At this point, it was more than 11 per cent below its 52-week high of C$ 46.55 on July 28.

Allied Properties’ stock rose by more than 18 per cent in the last year, however, in the past few months it witnessed a slight downturn. It noted a fall of almost 10 per cent in the past three months and in the last one month it slumped by nearly two per cent. Its stock appears to be on the road to recovery as it surged by roughly two per cent in the last week.

Allied Properties posted a P/E ratio of 16, a P/B ratio of 0.833, a P/CF ratio of 20.30, a D/E ratio of 0.50, an ROE of 5.48 per cent and dividend yield of 4.117 per cent, at the time of writing.

It is also expected to roll out a monthly dividend of C$ 0.142 per share to its shareholders, payable on November 15.

4.    RioCan Real Estate Investment Trust (TSX:REI.UN)

RioCan Real Estate Investment Trust noted its stock soar by about 53 per cent in the past year. On October 15, it was priced C$ 22.53 per share at the market close, up by 0.22 per cent.

The stock of the C$ 7 billion market cap RioCan experienced a YTD growth of roughly 35 per cent and climbed nearly 12 per cent in the past six months. However, it slipped by more than one per cent in the last three months. Its stock marked an increase of more than one per cent in the past week.

RioCan held a P/E ratio of 16.30, a P/B ratio of 0.909, a P/CF ratio of 13.30, an ROE of 5.67 per cent and a dividend yield of 4.261 per cent, on October 18.

On October 7, RioCan paid a monthly dividend of C$ 0.08 apiece to its shareholders.

5.    Canadian Apartment Real Estate Investment Trust (TSX:CAR.UN)

 

Canadian Apartment Real Estate Investment Trust witnessed its stock trading below by 1.293 per cent at C$ 59.56 apiece on October 15. Its stock soared by about 34 per cent in the past year and expanded by more than 19 per cent on a YTD basis.

Canadian Apartment held a market capitalization of C$ 10.2 billion, a P/E ratio of 7.60, a P/B ratio of 1.064, a P/CF ratio of 21.80, a D/E ratio of 0.62, an ROE of 15.01 per cent, an ROA of 8.86 per cent and a dividend yield of 2.434 per cent, at the time of writing.

The REIT is expected to roll out a monthly dividend of C$ 0.121 to its shareholders on November 15.

Bottom line

 

As the world’s economies are facing a major energy crisis, oil, gas and electricity prices are more likely to rise which could ultimately hurt the post-pandemic spending spree. In such unpredictable times, investors are looking to invest in real estate investment trusts which offer stable returns. The above-mentioned REIT stocks provide dividends and could survive the economic recession.

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