Canada’s Housing Boom
Ever play Monopoly as a kid?
The winner always amassed the most properties by the end.
Much easier said than done, I might add…
But it might surprise you to know that we can use this same basic strategy to win on Wall Street too.
It all has to do with a simple investment that is very often overlooked by folks.
And unlike with a fake real estate monopoly, you won’t be subject to a bad roll of the dice. It’s actually easier to build a real estate monopoly in real life.
Let me show you how.
Easy Real Estate Riches
Most investors aren’t familiar with real estate investment trusts, or REITs.
And most are even less familiar with the specific REITs I will show you today.
REITs invest in a wide variety of real estate, from office buildings to storage units to apartment buildings.
The niche I’m talking about today is the hotel/lodging REITs, which own and manage hotels and resorts.
Hotel REITs can range from budget hotels along busy interstate highways to luxurious five-star resorts in highly desired vacation destinations.
There are lots of hotel REITs — more than 20 — to choose from. And they are especially attractive to income-focused investors because Congress made them exempt from corporate taxes, provided several strict conditions are met.
The most important of which is that they must distribute at least 90% of all of the profits in the form of dividends to shareholders.
This is why REITs pay much fatter dividends than blue chip stocks.
How much fatter, you ask?
REITs pay out an average dividend yield of 5.5%!
And here’s how you get your slice of that money.
The Great Northern Real Estate Boom
As per Bloomberg:
“Toronto’s home prices extended gains in November and are now accelerating at the fastest annual pace since 2017 as demand continues to outpace a dwindling supply of listings.”
The report also notes condos specifically have seen the biggest increases in the past year, with prices rising 9.5% on average.
The housing price boom up north could also impact commercial real estate prices, and in anticipation of rising costs for real estate in Canada, I’d like to talk about a REIT that has nice exposure to Canadian properties.
Brookfield Property REIT (BPR) is a subsidiary of Brookfield Property Partners LP. The company is a typical REIT, but the reason we mention it today is due to its exposure in Canada.
BPR has roughly $160 billion in assets worldwide, $25 billion of which are tied up in Canadian properties. And this is a simple, cheap way to gain some exposure to the Canadian real estate boom.
And even if the impacts of Canada’s housing boom are more muted than expected on REITs like BPR, it’s still a solid income move because it pays a huge dividend yield of over 7%.
Chief Income Expert, Mike Burnick’s Wealth Watch