According to data Canada Mortgage and Housing Corporation (CMHC), the housing starts trend was 204,376 units in July 2020. This was higher than the 199,778 units in June 2020 and increased for the second consecutive month.
According to CMHC’s Chief Economist, “The rise in the number of multi-family housing starts in large urban areas, including Toronto, Vancouver and the oil centers of the Prairies, has been at the root of the national increase. Following declines in previous months due to COVID-19 measures, higher activity in June and July leaves the trend in housing starts in line with the long-term average level of housing starts. “
CMHC expects national housing starts to follow a downward trend in the near term due to the economic impact of the COVID-19 pandemic. However, the Canadian real estate market has been trending upward for several years now. Prices in the first quarter of 2020 were up 3.4% year-over-year compared to a 3.3% decline south of the border.
In addition, average house prices in Canada over the past 15 years have increased by almost 90%. Given the recent rebound in housing starts, it makes sense to bank on the nation’s major mortgage lenders right now.
First National Financial has a 5.6% dividend yield
National financial first (TSX: FN) is the largest non-bank provider of single-family residential mortgages in Canada. It offers a portfolio of mortgage solutions and works with the broker channel to provide personalized solutions.
First National Financial stock is trading at $ 34.66, 23% below its 52-week high. This means that its dividend is now paying a tasty 5.63%. Thus, an investment of $ 10,000 in FN shares will generate $ 563 in annual dividend payments.
The company has around $ 115 billion in mortgages under administration (MuA) and also had a strong June quarter. The company’s sales rose 3% to $ 344.6 million while net profit rose 58% year-on-year.
Its new mortgage origination increased 2% to $ 6.6 billion and mortgage renewals increased 19% to $ 2.5 billion in the second quarter. While residential activity performed well, it was offset by weak performance in the Company’s commercial mortgage segment.
First National Financials commercial mortgage originations fell 17% while renewals were down 23% year-on-year. FN has been a very successful stock for some time and has managed to beat the giants as the Royal Bank of Canada and Toronto-Dominion Bank in the last decade.
Equitable Group has grown by 50% over the past five years
Fair Group (TSX: EQB) is a Canadian financial services company that operates through its wholly owned subsidiary, Equitable Bank, which has become the ninth largest independent Schedule I bank in Canada. Equitable Bank is also focused on providing residential loans, business loans and savings solutions to Canadians.
While EQB stock trades 33.6% below its 52-week high, it has risen 50% in the past five years. Additionally, the 1.83% equity term yield may seem too appealing to income investors, however, it has increased dividends by 85% over the past four years.
Equitable Group is valued at a market cap of $ 1.36 billion and trades at a multiple sell futures price of 3.4 and a multiple profit price of 7.5. The stock seems largely undervalued given its 5-year earnings forecast of 24.4% and a 5-year PEG ratio of 0.3.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Foolish contributor Aditya Raghunath has no position in the stocks mentioned.