Passive-income investors shouldn’t just wait around for the next stock market correction to bring forth better bargains than those being served up by Mr. Market today. Sure, you may hear some market pundits looking for some sort of sustained decline over the near to medium term.
Indeed, a correction is to be expected every once in a while. And they’re not to be feared. I view them as mere road bumps on the road to ensure market enthusiasm doesn’t get out of control. Indeed, road bumps are always a great thing to have to keep the cars on the road from going too fast, perhaps increasing the risk of a crash.
Market correction or not, you shouldn’t just sit in cash waiting for one to happen. However, if you have some cash on the sidelines in a savings account, you will be ready to take advantage of better prices and lower valuations when the time comes and investors take a drastic shift in sentiment.
For now, however, I’m not against checking out some of the market’s passive-income heavyweights. A lot of them are cheap, with yields that I believe will contract considerably once interest rates fall and today’s slate of high dividend yields no longer need to “compete” with bountiful risk-free assets, like bonds or Guaranteed Investment Certificates (GICs).
Without further ado, let’s check out two of my favourite passive-income plays that I’d bet will outperform for the rest of the year.
SmartCentres REIT
SmartCentres REIT (TSX:SRU.UN) isn’t just another retail-centric REIT. It’s one with staying power and a wonderful distribution (currently yielding 7.68%). Though shares have been a tough ride in recent years, I think there’s a path higher as rates look to retreat again while Smart’s smart managers look to execute.
The main star of the show (apart from the yield) has to be the impressive portfolio of retail and residential properties. Sure, SmartCentres is obviously a play on strip malls, but it’s becoming quite diversified over time as new projects begin to come online. In the future, Smart will have exposure to a broad base of property types.
With a robust balance sheet, a steady yield, and a valuation that’s all too easy to get behind, investors may wish to bet on the name as the climate improves, all while the firm adds millions worth of square footage to the mix. If you’re looking to play optimized Canadian communities of the future, Smart is arguably one of the best names to check out right now.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is an underrated international Canadian bank stock that’s really struggled of late, falling harder than some of its peers. Today, the stock is looking to keep adding to recent gains since bottoming out a few months ago.
With a 6.64% dividend yield and the means to experience higher growth on the back of the Latin American markets, BNS stock certainly seems like an exciting albeit rocky bank stock fit for those seeking the perfect mix of value and long-term growth.
With a great balance sheet, impressive international exposure, and the means to make it through tough times, I’d not bet against the name here.
