The property market has done very well over the last few years, but there are beginning to be signs that the boom might be over.
However, that doesn't mean you have to abandon all exposure to the property market, there are some great businesses on the ASX that are all about servicing property owners.
Here are three of the best in my opinion:
REA Group Limited (ASX: REA)
REA Group is the owner of a number of popular real estate websites including realestate.com.au, flatmates.com.au and realcommercial.com.au.
It also has stakes in property sites in South East Asia, India and the USA.
A property vendor would be making a mistake if they didn't utilise one of REA Group's services to sell. The company has grown the dividend and earnings per share significantly since it listed and could continue to do so.
REA Group is currently trading at 35x FY17's estimated earnings with a grossed-up dividend yield of 1.97%. I think the share price is a little high at the moment, but I'll be very interested if it goes under $50 again.
DuluxGroup Limited (ASX: DLX)
DuluxGroup is the owner of several leading house improvement brands including Dulux, British Paints, Selleys, Yates and Cabot's.
Having just unveiled net profit after tax growth of 14.2% and dividend growth of 13% it shows how powerful the combination of improving margins and a strong brand can be.
DuluxGroup is currently trading at 19.5x FY17's estimated earnings with a grossed-up dividend yield of 5.37%. The share price is fairly good value, even after its rise during 2017 so far.
Reece is Australia's leading supplier of bathroom and accessory items.
The large growth of Australia's population, the property market boom and our love for renovating have all been factors in Reece's impressive 120% growth of the share price over the last five years.
Reece is currently trading at 21x FY16's earnings with a grossed-up dividend yield of 3.34%. I think this is fairly reasonably priced considering how much the business has grown in recent years.
Foolish takeaway
I think all three of the above companies would make far better choices than an investment property at the current prices. Plus, you would receive a fully franked dividend compared to losing cash through negative gearing. Out of the three, I think DuluxGroup has the best chance of providing investors with the highest total shareholder return over the next 12 months.
