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This economic recovery coming out of the pandemic has been truly incredible. Indeed, inflation is something we haven’t seen in some time. Accordingly, across most asset classes, inflation (in asset prices) is being seen a direct consequence of the monetary policy of late. For real estate stocks, this has provided a big boost as well of late.
Given the view that real estate stocks are more dividend-paying bond proxies, the growth investors have seen of late has made this sector a tricky one to assess. Picking individual REITs isn’t as easy as it once was.
However, these two REITs are among the top real estate stocks I think investors should consider right now. Let’s dive in.
Top real estate stocks: Killam Apartment REIT
Finding the right sub-sectors to invest in, particularly in the world of real estate stocks, is very important. Among the two sub-sectors I think carry the best long-term value are residential and industrial real estate.
In the residential real estate space, Killam Apartment REIT (TSX:KMP.UN), remains a top pick of mine. This company’s portfolio of high-quality assets is notable. However, Killam is uniquely positioned mainly in the Atlantic provinces. This area of the country is one I see as a high-growth geography that’s overlooked by investors.
Accordingly, I see lots of upside with Killam right now. The company is moving toward a mixed-use model, incorporating more retail space into its model. Given the post-pandemic recovery we’re all seeing, this is bullish for near-term growth.
Over the long term, I see Killam as a solid pick. This REIT yields 3.2% and has one of the most stable and consistent payouts of its peers.
Dream Industrial REIT
Among industrial-focused real estate stocks, Dream Industrial REIT (TSX:DIR.UN) is an excellent option. Indeed, this global REIT has an impressive portfolio of industrial real estate properties. These properties span North America and Europe, anchored by some of the largest tenants in the global economy.
Given the company’s industrial focus, Dream’s real estate portfolio underpins a booming e-commerce and logistics market. Accordingly, those bullish on continued growth in this sector get a very nice picks-and-shovels play with Dream.
As far as long-term real estate stocks go, Dream is a top-notch holding. This REIT yields approximately 4.3% and has one of the better growth trajectories of its peers. These fundamentals are supported by extremely low vacancy rates and excellent cash flow fundamentals.
Thus, both Killam and Dream Industrial are two real estate stocks long-term investors shouldn’t pass up right now.
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Fool contributor Chris MacDonald has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Killam Apartment REIT. The Motley Fool recommends DREAM INDUSTRIAL REIT.