Earnings season (part4)

R.E.I.T.s are a relatively new phenomenon that are listed on the T.S.X.They are an accumulation of capital,both debt and equity,that primarily invest in real estate.They trade on their substantial dividends as well as on earnings.Most offer at least a 5%dividend.This year it is expected that interest rates may rise and that tends to bring the price  per share for R.E.I.T.s down.But it is contended that interest rates will not be that big a factor in 2014.The Bank of Canada does not seem ready to raise interest rates yet as growth is expected to be at an anemic 2 to 2.4% growth.Bond yields may rise by 25% but the rate on the 10 year Canadian bonds is only at 2.55%.A 25% increase brings the yields to only around 3%.Some marginal investment may move to Canadian bonds but this should not affect R.E.I.T.s that offer a 5% or greater dividend.Especially if earnings are increasing by 20%or more.
  Kinds of R.E.I.T.s
There are three main kinds of R.E.I.Ts:reits for hotels,reits for shopping centres and reits for apartment building complexes.There are others but these are the main ones.The dividend rate is almost always higher than for other stocks.Many substantial companies offer dividends like Extendicare and Riocan at 5.6%to 6.83%.The reits for senior residence like Chartwell and Extendicare are expected to have only slight increases in earnings.Other apartment building based reits should have larger gains in earnings.Interrent ,for example,is expecting a 30% increase in earnings. Reits that supply hotel accomodations may not do so well this year.But there is  a breakdown;those that offer luxury accomodations wil see small increases in earnings whereas those like Innvest that offer more modest accomodations could see good gains.The prices of reits is harder to predict as it will depend on the movement of the T.S.X.
  Winners
I am again picking juniors as those that should have the largest percentage increases.I also like stocks with low price/earnings ratios.So I pick here BTB trust,Innvest,Interrent,Partners Investment units and Artis.All have low price /earnings ratios and most offer dividends above 7%.A 3 % bond yield shouldn't affect these stocks in a substantial way.