One note of caution: most bonds have seen a sharp run-up lately. To make sure you don't overpay, check the net asset value of any fund and compare it to the share price before purchasing. These bonds generally trade near 90% of their face value, but some funds now trade above net asset value.
Canada's strong property market allows these often overlooked REITs to pay generous distributions and healthy yields. Canadian REITs such as
carry yields of up to 11.5% and pay monthly. Yields are high because these REITs, like their U.S. counterparts, pass along their income to shareholders to avoid paying income taxes. (Read my
on "Where You Can Find 11.5% Yields.")
Unlike U.S. real estate, Canada's property market is thriving. Occupancies average 97.4%, according to a June report by credit rating agency DBRS. Moreover, Canadian REITs are taking full advantage of low interest rates (even though they are now rising slightly) to refinance existing debt at historically low rates.
And don't worry about buying Canadian securities. Most U.S. brokers can fill orders on the Toronto Stock Exchange (TSX). Fidelity, E*Trade and Schwab all offer access. Buying Canadian shares can actually be as simple as buying those in the United States. At worst, it might take an extra phone call to your broker to tap into the double-digit yields.
Action to Take
: The ideas mentioned above are just to get you started. And while the specific securities I mentioned offer high yields, they don't necessarily represent my favorite plays. I typically reserve those for
High-Yield Investing and High-Yield International
subscribers, but they do offer mouth-watering yields. The main thing to remember is that in a low interest rate world, you don't have to settle for low yields. You just need to do your homework, and get a little creative.
This article originally appeared on StreetAuthority. To read more articles from Carla Pasternak on StreetAuthority, you can visit this link.
Disclosure: At the time of publication, Carla Pasternak owned no positions in the stocks mentioned.