Tag Archives: TSX:NVU.UN

Is this a Market Top? What Will You Do?

You might have noticed the general market represented by the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is trading in a sideways channel between roughly $185 and $209.

SPY technical chart May 2016

In fact, Financial Visualization’s daily chart marks a double top, which technically means it’s going down from here. There’s a strong support at $180, but if it falls through that, there will be more downside.

SPY finviz chart May 2016

OK, so all of this is like reading tea leaves. How does the market look fundamentally?

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How To Save More Money

Do you find that you’re not saving enough even though you have a plan to limit your spending? Let’s go back to the basics to see how to save more money. These tips should lead you to more savings and money in your pocket.

save money

First, we have this savings formula: Savings = Earnings – Expenses

It tells us that:

  • The more you earn, the bigger your savings can be.
  • The less you spend, the bigger your savings can be.

So, let’s think of ways to increase your earnings and reduce your expenses.

Increase earnings

Increase earnings through passive income

What’s exciting to lots of people is to earn a passive income. You can earn a passive income by investing and renting out real estate properties to collect monthly rent.

However, that comes with managing properties and dealing with tenants. It could turn out to be more work than expected and would defeat the purpose of a passive income, which should require less work than an active income.

Perhaps a simpler way to generate a passive income is through a portfolio of dividend stocks. Less money is required for an initial investment compared to a real estate property.

Let’s say a condominium costs $300,000 and you rent it out for $1,500 per month, that’s a return of 6%, excluding the mortgage interests, maintenance fees, property tax, strata fees, and so on.

Historically, the market has returned 7-10% per year. Theoretically, you can buy quality dividend stocks when they’re on sale. After the commission fee for buying, you can hold and avoid paying any more commission fees that are required for sales.

Then, you can just collect passive income from dividends. It’s common to find 3-4% dividend yields that can grow at least 5% per year and 5% yields that may grow 2% a year.

Eligible Canadian dividends are favourably taxed if received in a non-registered (taxable) account for Canadians, and likewise, qualified U.S. dividends are favorably taxed for Americans. Canadians can receive qualified U.S. dividends in registered retirement savings plans (RRSPs) without the 15% withholding tax.

The business growth, which eventually translates to capital gains, is tax deferred until you sell, at which time, only 50% are taxed at your marginal tax rate (if you’re Canadian).

If Canadians buy and hold in a tax free savings account (TFSA), they don’t have to pay any taxes on dividends and capital gains!

If your goal is to generate a passive income, then, you don’t even need to worry about the sell side. Just focus on buying quality, dividend-paying companies when they’re at reasonable valuations and collect their dividends forever.

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Northview Apartment REIT Has An 8.7% Yield With A 30% Margin Of Safety

Northview Apartment REIT is the third-largest multi-family REIT in Canada with a diversified portfolio across Canada. It has an 8.7% yield, a 30% margin of safety, and a potential upside of 44%. There are multiple value-creation opportunities under execution that could offer even higher returns.

Northview Apartment REIT (TSX:NVU.UN) has a P/FFO of 7.7 while its normal multiple of 11.3 implies there’s a 30% margin of safety with a potential upside of 44% from under C$19 level to the C$27 level, which would be its normal multiple of 11.3.

You might know Northview under its previous name and ticker of Northern Property REIT (TSX:NPR.UN).

Northview is negatively affected by its resource region exposure. By acquiring the True North portfolio last year, Northview has reduced its net operating income exposure from resource regions from 30% to 22%. The True North portfolio allowed Northview to expand into Ontario, Quebec, New Brunswick, and Nova Scotia.

Now, Northview has more than 24,000 suites in 60 markets across 8 provinces and 2 territories. On top of that, it also has 1.2M square feet of commercial real estate. The REIT is being proactive by identifying value creation opportunities, such as identifying REITs for high-end renovation and from its acquisition portfolio–raising rents that are below market as tenant turnover occurs.

Northview believes these value creation opportunities can increase its FFO/unit by C$0.29, equating to an about 12% growth from the 2015’s estimated FFO/unit of C$2.43. Northview is scheduled to release its Q4 earnings on March 9.

Northview has increased its distribution 8 times in 13 years without ever cutting it. Simultaneously, it decreased its payout ratio from over 90% to below 70%. Read More