Yahoo Finance Best Stocks to Buy in May 2024: TSX Real Estate Sector
Written by Jitendra Parashar at The Motley Fool Canada
Real estate stocks currently make up only a small portion (around 2.1%) of the S&P/TSX Composite Index. However, that doesn’t mean they are not worth investing in. In fact, with growing interest rate cut hopes in the near term, the real estate sector could experience strong gains as lower interest rates tend to increase the affordability of financing for property purchases, which could take property values and rental yields higher. This is one of the key reasons why many real estate stocks look really attractive right now, especially for investors who want to diversify their portfolios and tap into steady monthly passive income through dividends.
Here are two top TSX real estate stocks that I think are worth buying in May 2024 based on their strong fundamentals, growth prospects, and impressive dividend yields.
Chartwell stock
Chartwell Retirement Residences (TSX:CSH.UN) is a Mississauga-based real estate trust with a focus on providing housing options to seniors across Canada, ranging from independent to assisted living and long-term care. The company currently has a market cap of $3 billion as its stock trades at $12.36 per share after rallying by more than 35% in the last year. At this market price, Chartwell stock has a 5% annualized dividend yield and distributes these payouts every month.
In the first quarter this year, Chartwell posted a solid 10.9% YoY (year-over-year) increase in its resident revenue to $183.9 million, due partly to higher rental and service rates. To add optimism, increased income from joint ventures, lower expenses, and higher resident revenue also helped the company report a notable reduction in net loss to just $2.0 million last quarter compared to a loss of $9.3 million a year ago.
Its consistently rising occupancy rates, higher service rates, and continued focus on driving growth through new acquisitions could help Chartwell accelerate its financial growth in the years to come, which can help its share prices continue soaring.
First Capital REIT stock
First Capital REIT (TSX:FCR.UN) could be another top TSX real estate stock long-term investors can consider adding to their portfolios in May 2024. This Toronto-headquartered, retail-focused real estate investment trusts (REIT) currently has a market cap of $3.2 billion as its stock trades at $15.25 per share after surging by around 10% for the last six months. Just like Chartwell, First Capital also distributes its dividend payouts every month and currently has an annualized dividend yield of 5.7%.
The REIT has started 2024 on a solid note as its total funds from operations jumped around 52% YoY in the first quarter to $81.6 million due mainly to robust leasing activity, higher lease termination income, and strong base rents. While its total portfolio occupancy rate remained stable at 96.2%, Chartwell’s same-property net operating income growth rate improved to 7.8% YoY last quarter from around 4% a year ago.
With a focus on driving long-term growth, Chartwell invested nearly $78 million in its properties in the first quarter, including new strategic acquisitions. Moreover, continued strong demand for its grocery-anchored properties and its effective leasing strategies brighten the REIT’s long-term growth prospects, making it an attractive TSX real estate stock to buy now.
The post Best Stocks to Buy in May 2024: TSX Real Estate Sector appeared first on The Motley Fool Canada.
Should you invest $1,000 in Chartwell Retirement Residences right now?
Before you buy stock in Chartwell Retirement Residences, consider this:
The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chartwell Retirement Residences wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.
Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,271.97!*
Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 32 percentage points since 2013*.
See the 10 stocks * Returns as of 5/21/24
More reading
Can You Guess the 10 Most Popular Canadian Stocks? (If You Own Them, You Might Be Losing Out.)
How to Build a Bulletproof Monthly Passive-Income Portfolio in 2024 With Just $25,000
The Motley Fool recommends First Capital Real Estate Investment Trust. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.
2024
