BMO Canadian ETF Dashboard

— as of August 31, 2019 —

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Canadian REITs Trending Upward

Russ Visch

Canadian REITs Trending Upward

Macro Update

  • The S&P/TSX Total Return REIT Index is up 2.96% since May 1, while the S&P/TSX Composite Index is down -0.35% during the same time.
  • The reversal of interest rate sentiment and the dovish stance of the Bank of Canada has positively impacted Canadian Real Estate, which is generally a rate-sensitive sector.

Bottom-Up Impact

  • Strong performers in the sector include Dream Industrial REIT (up 24.26% YTD) and Choice REIT (up 19.49% YTD).
  • Dividend Income: Many REITs consistently grow their dividends. Dream Industrial REIT’s annualized distribution yield is approximately 6.0%; RioCan REIT’s annualized yield is about 5.42%, with other REITs yielding around 5%, which enhance total portfolio performance.
    Source: Bloomberg, May 22, 2019.

The Technical Analysis

The S&P/TSX Composite REIT Index: The long-term trend remains bullish and the Index is reversing back to the upside from a successful test of the recent breakout near 3455, accompanied by new buy signals in daily momentum gauges. The initial breakout opened a new upside target of 3895, which remains in effect. Higher targets are likely on a 6-12+ month basis as part of the emerging new cyclical bull market in equities.

bmo-etfs_03technicalanalysischart848px_2019-06-09_ENG.jpg#asset:2883

Implementation

For exposure to the Canadian Real Estate sector, consider buying the BMO Equal Weight REITs Index ETF, (ticker: ZRE).

bmo-etfs_04implementationchart848px_2019-06-09_ENG.jpg#asset:2887

Source: BMO Global Asset Management, May 21 2019.

Russ Visch

Canadian REITs Trending Upward

Macro Update

  • The S&P/TSX Total Return REIT Index is up 2.96% since May 1, while the S&P/TSX Composite Index is down -0.35% during the same time.
  • The reversal of interest rate sentiment and the dovish stance of the Bank of Canada has positively impacted Canadian Real Estate, which is generally a rate-sensitive sector.

Bottom-Up Impact

  • Strong performers in the sector include Dream Industrial REIT (up 24.26% YTD) and Choice REIT (up 19.49% YTD).
  • Dividend Income: Many REITs consistently grow their dividends. Dream Industrial REIT’s annualized distribution yield is approximately 6.0%; RioCan REIT’s annualized yield is about 5.42%, with other REITs yielding around 5%, which enhance total portfolio performance.
    Source: Bloomberg, May 22, 2019.

The Technical Analysis

The S&P/TSX Composite REIT Index: The long-term trend remains bullish and the Index is reversing back to the upside from a successful test of the recent breakout near 3455, accompanied by new buy signals in daily momentum gauges. The initial breakout opened a new upside target of 3895, which remains in effect. Higher targets are likely on a 6-12+ month basis as part of the emerging new cyclical bull market in equities.

bmo-etfs_03technicalanalysischart848px_2019-06-09_ENG.jpg#asset:2883

Implementation

For exposure to the Canadian Real Estate sector, consider buying the BMO Equal Weight REITs Index ETF, (ticker: ZRE).

bmo-etfs_04implementationchart848px_2019-06-09_ENG.jpg#asset:2887

Source: BMO Global Asset Management, May 21 2019.