The TFSA is a profoundly powerful tool with the potential to enrich investors who know how to leverage it properly. Maximize your contribution when you can, invest (don’t speculate) in stable securities that pay large dividends (or distributions), reinvest these dividends (if possible), and tilt the odds in your favour given our positioning in the market cycle.
We could be in the first innings of a nasty recession, so you might as well get paid in cold hard cash, as capital gains will be few and far between as the markets continue to falter. Without further ado, here are three extremely high-yielding securities with stable, generous, and growing payouts that’ll continue paying investors as Mr. Market pulls out the rug from underneath us all.
Automotive Properties (TSX:APR.UN)
With an 8.7% yield, Automotive Properties is a mega-high-yielder that make income investors very rich through an economic slowdown like the one ahead.
Shares of Automotive Properties recently tanked 23% from peak to trough, and although it may seem that anything to do with the autos or auto dealerships (I think we’ve hit peak auto) is a reckless investment, most investors, I believe, are unfairly shunning Automotive Properties solely because of the “auto” that’s in its name.
Sure, the REIT rents to potentially auto dealers in an “unsexy” industry, but what you may not know is that REIT has its tenants secured with ridiculously long lease terms.
As I’ve noted in a prior piece: “When you look under the hood, you’ll see the trust has a lengthy weighted average lease term of nearly 13 years, which is long enough such that investors should have zero worries when it comes to the volatile ups and downs that the auto industry may be experiencing over the short to medium term.”
The auto industry is extremely cyclical, but rest assured, you’re getting a much smoother ride from Automotive Properties REIT. Whenever it flops, the enhanced yield is worthy of your investment dollars, as the payout is safe, sound, and opportunistic given the volatility experienced by equities of late.
Inovalis REIT (TSX:INO.UN)
With an 8.5% yield and ample growth potential, Inovalis is my favourite high-yielding REIT by a country mile. Like equities, Inovalis shares were roaring to highs prior to the October-December sell-off. Although the 8.5% yield may be indicative of a damaged business, investors would be comforted to know that Inovalis shares are only off 10% from their highs.
The most striking thing about Inovalis isn’t just its huge upfront yield. As a smaller business with a $225 million market cap, the trust has more room for distribution growth and agility to take advantage of opportunities as they come. With an excellent management track record, promising projects on the horizon and enough financial flexibility to support distribution hikes down the road, Inovalis is the quintessential income stock for those who desire a raise without taking on too much risk.
Furthermore, Inovalis provides Canadians with an outlet into the French and German real estate markets, so those fears over the frothy Canadian housing market? Well, they don’t really apply to Inovalis, which is a huge plus for those seeking to geographically diversify their portfolios without needing to venture on unknown exchanges.
Stay hungry. Stay Foolish.
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Fool contributor Joey Frenette has no position in any of the stocks mentioned.