According to recent housing market data from Royal Lepage, big cities such as Toronto and Vancouver are experiencing sizeable drops in housing prices. But in smaller and more affordable cities, prices are actually rising. In Quebec City, which is classified as a mid-priced market, prices were up more than 10% during the first quarter.
While the headlines may not sound all that great in the biggest Canadian cities, investing in real estate may still be a good move for investors, especially if you're looking at a diversified real estate investment trust (REIT). The BMO Equal Weight REITs Index (TSX:ZRE) has been beating the market this year. It's up over 9% while the TSX has risen by just under 7%.
Plus, a big bonus is that with the REIT you'll collect a lot of dividend income. It currently yields 4.8%, which means that your total returns from owning the REIT would have been even higher this year. It also makes payments every month, making it an attractive option if you want some recurring cash flow on a more regular basis than just every quarter, which is normally how often most dividend stocks pay.
The Equal Weight ETF invests in a broad mix of other REITs, including Riocan, Slate Grocery, and Allied Properties. With some excellent diversification, the BMO Equal Weight REITs can provide you with a fairly safe payout, and a good way to benefit from the growth in the housing market. And although it's not strong in all cities right now, real estate generally does go up in the long run, which is why the REIT can be a good option for buy-and-hold investors.
