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First Brexit… then Trump… Now, it’s time for Pro

Is your portfolio really prepared for what’s coming next?

To help investors like you navigate this historically uncertain — yet high-flying — market and prepare for an inevitable downturn, we’re re-opening our Motley Fool Pro Canada service to a select few new members for a short time.

To discover how Pro Canada could help you to increase your upside potential… reduce your downside risk… and earn paycheque-like income in the process, simply click here — before the small number of spots we have left are all gone!

Need Income? Become a Passive Landlord

Real estate can be a part of your portfolio without you having to invest in individual properties. Instead of being a landlord and having to deal with mortgages, tenants, and maintenance, you can choose to be a passive landlord by investing in real estate investment trusts (REITs) and collecting passive rent.

REITs collect rent from the many properties they own and manage, and they pay out most of that cash flow as distributions to unitholders. So, you can conveniently be anywhere in the world and collect juicy paycheques from your REIT holdings every month.

In fact, you can collect high yields of more than 8% from Dream Industrial Real Estate Invest Trst (TSX:DIR.UN) and Northview Apartment REIT (TSX:NVU.UN) today.

Dream Industrial

Dream Industrial is the largest pure-play industrial REIT in Canada. Since its initial public offering, Dream Industrial has grown its asset base from $0.7 billion to $1.7 billion across 219 properties.

Two-thirds of its quality portfolio is multi-tenant, which offers opportunities for rental growth. Although it generates about 32% of its net operating income (NOI) from Alberta, it reported a high occupancy of 98% there in its March presentation.

On top of that, for this year and next, there are only 0.9% of oil and gas expiries. Furthermore, no tenant contributes more than 3.8% to its NOI, so Dream Industrial doesn’t have any single-tenant risk.

At $8.22 per unit, Dream Industrial offers an above-average yield of 8.5%. Its distribution is safe because it only pays out about 85.4% of its adjusted funds from operations.

Northview Apartment REIT

Northview is the third-largest multi-family REIT on the Toronto Stock Exchange. Its portfolio consists of 24,000 residential suites in more than 60 markets across eight provinces and two territories.

Northview’s residential portfolio makes up about 85% of its overall portfolio. The rest of its portfolio is made up of 12% of commercial properties and 3% of execusuites and hotels.

Lower commodity prices have pushed the REIT’s share price roughly 24% lower than it was a year ago because 22% of its portfolio is based in resource regions. However, Northview has historically treated unitholders well by raising its distribution eight times in 13 years.

At $19.47 per unit, Northview offers an above-average yield of 8.4%. Based on its estimated 2016 adjusted funds from operations per unit, the REIT’s payout ratio is less than 81%. So, it should be able to maintain its high yield.

Conclusion

REITs pay out distributions that are like dividends but are taxed differently. If you wish to avoid the different tax-reporting hassle, buy REITs in TFSAs to earn tax-free monthly income.

However, investors may also be interested to know that in non-registered accounts, the return-of-capital portion of REIT distributions is tax deferred until unitholders sell or adjusted cost basis turns negative.

If you’re looking for a high income, consider Dream Industrial and Northview for yields of more than 8%. Dream Industrial is fairly valued and Northview is about 20% discounted from its normal multiple.

Motley Fool issues rare "double down" stock alert

Not to alarm you but you recently missed an important and rare event. Stock Advisor Canada issued a "double down"... and history suggests it pays to listen. Because 10 of the most lucrative "double downs" in one of the Motley Fool's premier services skyrocketed an average of 434%! So, simply click here to discover why Motley Fool "double downs" have some investors rocking with excitement. Five years from now, you'll wish you'd grabbed this stock. Click here to learn more.

Fool contributor Kay Ng owns shares of Northview Apartment REIT.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

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