The U.S. Federal Reserve surprised the markets on Wednesday saying that an interest-rate increase could be in play for June’s policy meeting if the U.S economy keeps improving. If the Fed does hike interest rates in June, then a second rate hike would be possible later this year.
In Canada though, the central bank is likely to remain on an easing path. The Bank of Canada is expected to keep interest rates unchanged at 0.5% when it meets next week. However, the central bank could likely announce a rate cut later in the year as the economy continues to struggle. In a low interest rate environment, high yielding assets such as REITs can be a healthy addition to your portfolio.
REITs provide exposure to the real estate market either directly through investments in properties or indirectly through mortgages. Given that the low interest rate environment is likely to continue in Canada, investors should consider high yielding REITs such as Plaza Retail REIT (TSX: PLZ.UN). The REIT currently offers a yield of more than 5%. Earlier today, Plaza Retail announced its May 2016 monthly distribution in the amount of $0.02167 per unit ($0.26 annualized).
