Comparing Canadian REIT’s to US REIT’s

July 12, 20184 Comments

Technically, the Canadian REIT scene is in pretty decent shape. The iShares REIT ETF (XRE-T) seems to be happily moving up in a nice uptrend. Its following my key trending rules of making higher highs and higher lows on the weekly chart. That, and its above its 200 day SMA. However, the sector is coming into an area of long time overhead resistance at around the mid $17.50-ish . Note that I opted NOT to use the cumulative dividend chart –this is a straight price chart. A dividend-inclusive chart changes the outlook to being through its technical resistance. Its price has not broken resistance. Higher dividend stocks should usually be approached with the non-dividend option if you use stockcharts.com.

Anyhow–Canadian REITS may be a good place to look if you are after a higher yielding security – but I am wary of the upside potential from here due to that overhead selling pressure potential.

The Dow REIT sector index that represents the US REITS has also been in an uptrend. However, it too is facing significant technical resistance at a level that has not been broken for some time. The chart below shows us that the DJR index was in a minor uptrend last year, but failed to significantly break through the mid 300’s level. The index is currently about to test its 2017 high of 360, and then 375. It will be interesting to see if it can successfully break either of those levels.

 

 

Canadian or US REIT’s?

For my money, I’d say both look ok, but I’d not be expecting much growth potential on either play.

 

Clip from Monday’s Bloomberg/BNN show with Keith Richards

Here is the full show from Monday, where I discussed my market outlook, and answered viewers questions on individual stocks.

4 Comments

  • Thank you for your analysis on REITs. You mentioned XRE but what could one say about the scenario for different REIT indices? The situation is very different for VRE (some similarity to XRE) and ZRE (equal weight).

    Thank you again for an informative blog.

    Reply
    • Sergio–thanks for the comment–you bring up a great point.
      VRE and ZRE are weighted differently than XRE–XRE being closer to a weighted index like most typical index ETF’s. The VRE and XRE illustrate that there are some REIT’s in better shape than others–and those stocks may not be weighted as heavily as in the XRE.
      Lesson from all of this: this sector looks to be a stock-pickers sector–in other words, buying the better individual names – or an equal weighted/ better distribution of weightings type ETF – may be a better play than buying the cap-weighted index ETF

      Reply
  • Keith, thanks for your analysis on this sector – it has been quite controversial, doing well in spite of rising interest rates. I think you brought up an interesting point that I don’t think I have ever heard from anyone else and one that I have wondered about for a long time: “Note that I opted NOT to use the cumulative dividend chart –this is a straight price chart. A dividend-inclusive chart changes the outlook to being through its technical resistance. Its price has not broken resistance. Higher dividend stocks should usually be approached with the non-dividend option if you use stockcharts.com.”
    I do use Stockcharts.com and I have noticed that shortly after a high paying dividend stock or ETF goes X-dividend, some of the indicators change to reflect this and it takes a while for the different numbers to get “absorbed”. I am aware of using an underscore before the stock symbol to get the unadjusted for dividend price chart but no one else has emphasized that this is the correct way to look at these stocks/ETFs. Stockcharts.com made a decision to default to the cumulative dividend chart. Not sure I understand their reasoning.

    Reply
    • Yes I have questioned them on that default before–they say most people want it. I cant see how its of any use, as most investors, when it comes to buy/sell levels, look at price–and dont cummulate dividends when making those decisions. Oh well…

      Reply

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