Maxing out your Tax-Free Savings Account (TFSA) contribution room of $7,000 before the year’s end is a strategic move that combines tax efficiency with wealth-building potential. The TFSA is a gift to Canadian investors, allowing your earnings to grow completely tax-free. Whether it’s dividends, capital gains, or interest, none of it will be taxed. That’s why it’s worth taking the time now to consider where to invest this money. One of the best options right now is Boardwalk Real Estate Investment Trust (TSX:BEI.UN).
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Why Boardwalk?
Boardwalk REIT is a major player in the residential real estate market in Canada, focusing on high-quality rental properties in key urban centres. With rising rental demand and limited housing supply, Boardwalk has positioned itself as a reliable growth stock with steady income potential. Its latest quarterly earnings report highlights its resilience and strength: revenue increased by 10.8% year over year, and net income grew by a staggering 40.6%. These numbers show that the stock isn’t just surviving in the current market environment. It’s thriving.
What makes Boardwalk especially appealing is its valuation. The stock is currently trading at just 0.77 times its book value, a clear signal that it is undervalued compared to its assets. This is an excellent opportunity for investors who want to buy a solid company at a discount. Historically, REITs like Boardwalk offer long-term stability. When these are priced below book value, they present a rare chance to invest in high-quality assets at a bargain.
Boardwalk also shines when you look at its operating metrics. With an operating margin of 51.87%, the company has demonstrated its ability to maintain profitability even in challenging market conditions. Its cash flow remains strong, with a levered free cash flow of $102.46 million in the trailing 12 months.
Looking ahead
The future outlook for Boardwalk is equally compelling. Canada’s immigration levels are at record highs, driving up demand for rental housing. Cities where Boardwalk operates are experiencing population booms, which translates into higher occupancy rates and increasing rental income for the REIT. Plus, the company has been proactive in upgrading its properties. This should help it command higher rents and improve tenant retention.
Boardwalk’s dividend yield currently sits at around 2.1%. Sure, it’s not the highest yield in the market. But it is backed by a remarkably low payout ratio of just 9.42%. This means Boardwalk retains the bulk of its earnings for reinvestment and financial flexibility. And that’s perfect for investors wanting to not just add that $7,000 contribution room but grow it for years to come.
Bottom line
In the end, adding $7,000 to your TFSA isn’t just about maxing out your contribution room. It’s about using your TFSA as a powerful tool to build long-term wealth. Boardwalk’s track record of performance, combined with its current undervaluation, makes it an excellent candidate for a TFSA portfolio. It allows you to diversify your investments with exposure to real estate, a sector known for its resilience and income-generating potential. And with the future outlook looking this strong, now could be the best time to buy.
