Cars torched. Molotovs hurled. Decrepit dictators toppled. The ground shook far beyond the desert epicentre. For investors, all good reason to seek the security of Canadian dividends.
In December, we bought iShares TSX REIT Index ETF (XRE) for our clients. Its 5% dividend yield and steady appreciation returned about 29% over the last year.
With the Canadian economy in good shape and financial conditions stable, we expect this ETF will have another good year, though its unlikely to match 2010.
For an ETF, XRE is fairly concentrated - not something we like as a general rule. But its holdings are quality names: Riocan is about 25% of the fund. H&R, Cdn Real Estate and Calloway make up another 40%. Chartwell (5%) is thriving says a colleague who has seen its big Mississauga location. Cap Reit (6%) is enjoying a landlord's market. Trading in XRE is light (see below) but enough to support most investors.
Within our portfolios, as market cycles mature, we gradually adjust the strategic holdings, first over-weighting safer, dividend-paying equities and later, to bonds. XRE is part of this move. So is the US Mega-Cap ETF (NYSEARCA:OEF) which we also bought in Dec.
This shift will continue over the coming year, regardless of, or perhaps because of, the shaking sands.
|Benchmark||S&P TSX 60|
|52 Week High||$14.47|
|52 Week Low||$10.96|
|Avg Daily Volume||0.17 Million Shrs|
|Avg Daily Volume ($)||$2.38 Million|
|Total Market Cap||$1.17 Billion|
|ETF Annual Fee||0.55%|
|ETF Trading Currency||CAD|
|ETF FX Exposure||CAD|
|Correlation to S&P 500||56.47%|
|Return to Risk Ratio||171.94%|
|Use of Leverage||No|
|Use of Futures||No|
|6 month Return||15.69%|
|1 Year Return||27.97%|
|2 Year Return||120.62%|
|3 Year Return||32.50%|
|Dividend Yield (NYSE:TTM)||5.06%|
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I am long XRE (the iShares TSX REIT Index ETF traded in Toronto)