A real estate investment trust or REIT is a type of income trust—an investment trust that holds income-producing assets. Their units trade on stock exchanges, but they flow much of their income through to unitholders as “distributions.”
REITs were first set up like mutual funds for real estate, created by the U.S. Congress in 1960. They’re usually publicly traded, and investors like REITs because REITS have a high dividend yield, based on at least 90% of their taxable income.
Canadian REITs must be a corporation that’s taxable, and follow all the rules of being a corporation. They must invest 75% or more of their total assets in real estate and make at least 75% of their gross income from their properties, including rent, financing and sales. Like most stocks that are publicly traded, they live by the rules of exchanges, and require no less than 100 shareholders.
Real estate investment trusts can be lower risk, because they invest in income-producing real estate such as office towers, shopping malls or hotels. Even so, real estate still has risks—its value rises and falls with changes in the economy, interest rates and occupancy levels. Investing in other types of income trusts can be risky as well, as the businesses that underpin them may have steady cash flow, but could stagnate as the economy changes.
Still, REITs are popular among investors seeking income. For you overall portfolio, follow TSI Network and use our three-part Successful Investor strategy:
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When investing in retail-focused REITs, investors should pay close attention to the quality of their properties as well as their tenants—both directly affect their distributions. Here are two REITs to count on for steady monthly payments.
RIOCAN REAL ESTATE INVESTMENT TRUST $18 is a buy. The REIT (Toronto… Read More
BCE INC., $45.62, Toronto symbol BCE, is still a buy.
The company is Canada’s largest traditional telephone service provider. It has 1.98 million residential customers in Ontario, Quebec, Manitoba and the Atlantic provinces. It also has 4.50 million high-speed Internet users and 2.08 million fibre-optic TV… Read More
SAPUTO INC. $31 (www.saputo.com) is a hold. The company is Canada’s largest producer of milk and other dairy products. It also operates dairies in the U.S., Australia, the U.K. and Argentina. In 2021, Saputo began multi-year restructuring to improve its long-term profitability. For example, it recently sold two… Read More
DREAM OFFICE REAL ESTATE INVESTMENT TRUST $18 is a buy. The REIT (Toronto symbol D.UN; Cyclical-Growth Dividend Payer Portfolio; Manufacturing sector; Units outstanding: 19.4 million; Market cap: $349.2 million; Dividend yield: 5.6%; Dividend Sustainability Rating: Average; www.dream.ca) owns 28 office properties, including two under development. The downtown Toronto market… Read More
Dividend investors tend to avoid small cap stocks over concerns that they are riskier than bigger firms. However, you can cut than risk with high-quality firms such as Leon’s and Russel. Both are leaders in their markets.
LEON’S FURNITURE LTD. $22 is a buy. The retailer (Toronto symbol… Read More
The work continues for these two REITs as they unload their less-promising properties to focus on their main assets. That sets them up for future gains and lets them maintain their current payouts.
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $17 is a buy. The REIT (Toronto symbol AP.UN;… Read More
Look for Canadian REITs that meet these 9 key criteria
Top-quality Canadian REITs are among the most stable and highest-yielding real estate investments–even despite the market changes ushered in because of the pandemic. That’s because many REITs hold high-quality, non-depleting assets, and have taken advantage of… Read More
These two REITs focus mainly on retail shopping malls, which adds risk. However, their high-quality properties continue to attract new tenants and help retain existing ones. As a result, both REITs recently raised their distributions.
RIOCAN REAL ESTATE INVESTMENT TRUST $18 is a buy. The REIT (Toronto symbol… Read More
AUTOMOTIVE PROPERTIES REIT $10 (Toronto symbol APR.UN; Units outstanding: 39.7 million; Market cap: $397.0 million; Dividend yield: 8.0%; www.automotivereit.ca) is a real estate investment trust that owns 77 commercial properties across cities in Ontario, Saskatchewan, Manitoba, Alberta, B.C. and Quebec.
The REIT’s properties offer 2.9 million square feet… Read More
LOBLAW COMPANIES LTD. $149 is a buy. Canada’s largest food seller (Toronto symbol L; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 316.4 million; Market cap: $47.1 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.2%; TSINetwork Rating: Above Average; www.loblaw.ca) is adding more discount-price stores as customers deal with high… Read More
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