1 Top TSX Stock for Investors Interested in Real Estate Exposure
Tricon living (TSX: TCN), with over 30,000 single-family and multi-family homes in the US and Canada in 2021, is an ideal choice for diversifying investor portfolios. In fact, the company’s core business model is perfect for investors who rely on real estate ownership.
With the impressive recent improvement in property prices, REITs are increasingly being considered by many investors. Let’s examine why Tricon could be an excellent choice for such investors today.
Tricon relies on market diversity
With REITs, one of the most important factors that investors look for when valuing these assets is their diversification. In that regard, Tricon is a winner.
The company distributes its rental apartment portfolio across 21 markets. These 31,000 residential properties are concentrated in single-family homes in regional markets in the United States. These markets typically have favorable demographic tailwinds. In addition, rental prices are rising in these markets, which makes Tricon’s fundamentals attractive.
The company’s occupancy rate remains high, as does NOI growth. Institutional demand for this REIT has skyrocketed as private investors are also piling up. For Tricon, a robust stream of management fees has helped prop up the trust’s balance sheet and create room for further growth.
In addition to this organic growth potential, Tricon also plans to sell a majority stake in its American multi-family portfolio. This sale will increase the REIT’s cash liquidity and also enable the future portfolio. I think the timing for this transaction is excellent and investors will benefit from this transaction over the long term. Accordingly, Tricon is well worth a second look for investors seeking exposure to the US single-family home market.
Strong financials and a bright future
Tricon’s fourth quarter results aren’t in yet, but I expect they will be strong. The company’s latest results showed impressive net income growth (nearly doubling) to $ 58 million. The company’s focus on the US sun belt and the strong demographic factors already mentioned played a major role in this result.
The story goes on
Long-term investors optimistic about Tricon’s positioning will like this stock at this level today. In fact, the company’s pipeline offers additional long-term growth potential with 4,000 additional units scheduled for delivery between 2022 and 2024. Construction delays have been minimized and it appears the company is on track to meet its delivery goals in the years to come. For long-term investors, this is a very good thing.
Indeed, Tricon is a winner when it comes to residential real estate. This stock offers Canadian investors excellent diversification. Additionally, the company’s growth prospects are about as good as investors in the REIT space can get today.
The post 1 Top TSX Stock For Investors Interested In Real Estate Exposure first appeared on The Motley Fool Canada.
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Fool Chris MacDonald has no position in the stocks mentioned in this article. The Motley Fool owns shares of and recommends Tricon Capital.
2021