Last year I purchased Canadian REIT (REF.un) and this year I will probably do the same. This is the most conservatively managed REIT in Canada. The current yield is 5%, but it should be noted that they have the lowest payout ratio in the sector, one of the strongest balance sheets and an excellent management team. When you buy Canadian REIT you get exposure to retail (50%), office (25%) and industrial (25%) properties across Canada.
This is the best REIT in Canada -- Dennis Mitchell, portfolio manager, Sentry Select REIT Fund
Here are some other options for you to consider:
Boardwalk REIT: Owns a portfolio of apartment buildings concentrated in British Columbia, Alberta, Saskatchewan, Ontario and Quebec. Boardwalk currently yields 4.9%.
PH&N Dividend Income Fund: Well managed Dividend Fund with a very low MER.
Let me know what you are buying this year by commenting on this post.
6 comments:
I appreciate your commentary and committment to this site. As a retail DIY investor I'd like to offer a couple of reflective remarks.
I don't have a TSA account because really I don't need it. In BC a dividend paying portfolio such as mine ensures an extremely low tax regimen (virtually tax free up to $71,000 grossed up in this province). The dividend credits in my case offsets thousands in interest and bond income too.
I used to be a client of PH&N and their fixed income team is probably the best in the country. Even the High Yield Fund GAINED 1.8% in 2008 when the sector norm was deep into negative territory. Having said that I'm very glad to be on my own and without any funds. For tax year 2008 even if a Dividend fund lost a lot you still had to pay tax because of redemptions as clients were bailing: Long held securities were sold at substantial capital gain to meet these payouts. Gordon Pape wrote an article (specifically on the Dividend Fund) on this last year, a copy I can email you
I have very little interest in making a major equity purchase since I am a cheapskate who bought massively (75%) last February/March ... it was gut wrenching but in hindsight I don't think I'll ever be able to buy that cheap again: Canadian preferreds, utilities, pipelines, RioCan, banks and insurance. The dividend yields are incredible! And in keeping with my parsimonious nature I'm still waiting for our dollar to overshoot parity before I even think of buying in the US Health care sector.
In Canada I bought a bit of BCE in December and I'm watching Premium Brands, a food distributor which made the switch from an income trust to a corporation in November yielding 12% (dividend) and has risen by 30% since then. The dividend is at 8.5% and the payout ratio is low. It was featured in an interview with the manager of the PHN Income Fund recently. I kick myself for not buying it!
But the very best investment anyone can make at all times is understanding how to save money and not use that credit card unless THEY pay you to use it (cashback). Debt free is the best way to live.
I was fortunate in purchasing Premium Brands shortly after they made the switch. My yield on cost is 10.80%.
Another solid company that converted in 2009 is Exchange Income Corporation (TSE-EIF). Their FCF payout ratio isn't atractive at present but their stock price has been rising attractively. I wouldn't be surprised to see EIF cut their dividend at some point but in the meantime I'm happy with my yield on cost of 12.66%.
I mainly invest for dividend growth in my RRSP & Investment accounts but I've been more aggresive in my TFSA. Lately I've become interested in seasonal market investing. I recommend everyone read Brook Thackray's book "Thackray's 2010 Investor's Guide" for a good insight into this investment strategy.
I'm just starting investing and I try to read as much as I can.
Reits are not the simplest sector to understand I think, and I prefer utilities,
but I'll take a deeper look at ref.un.
+
The conversion of income funds into corporations this year might have some negative impact on a stock.
The market reaction doesn't always make sense, and I'll be more carefull this year with my TFSA, since I try to
to keep some high yield stocks in this account.
Dan
aka anonymous in the first comment...:)
Great post Barry. BC Residents should really focus on Dividend Investing thanks to generous tax credits.
Neil Downey, RBC Dominion Securities, on Canadian REIT:
"High quality, diversified portfolio (both by geography and property type). Strong, conservative management team. Low AFFO [adjusted funds from operations] payout ratio. Low financial leverage. One of the longer track records of any REIT."
It is also highly likely that Canadian REIT will raise their distribution in 2010.
...
My TFSA is setup as a PC Financial High Interest Savings Account. I use my TFSA as an emergency fund instead of an investment account. :)
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