What to Buy: Artis REIT (TSX: AX-U, OTC: ARESF)

Why to Buy Now: Thanks to the recent selloff among dividend stocks, we finally have the opportunity to add a high-yielding Canadian real estate investment trust (REIT) to our Portfolio.

Artis REIT has built a portfolio of commercial property with high-quality tenants that’s diversified both geographically, with holdings in the US and Canada, as well as in terms of its holdings, which consist of office, industrial and retail properties.

Over the past few years, management has shrewdly used the low interest rate environment to greatly expand its portfolio, while at the same reducing its leverage. Now it’s poised to shift its focus toward organic growth from existing properties.

The REIT pays a monthly distribution of CAD0.09, for a current yield of 7.8 percent. It maintained this distribution throughout the prior downturn, and our expectation is that it will continue to do the same, even in a rising-rate environment.

While growth will necessarily slow as financing becomes more expensive, a resurgent economy should boost rents across its portfolio. As such, investors will be well paid to await REITs’ next major expansionary cycle.

Artis REIT is a buy below USD16.