Boost Your Income With These REITs

Want to pay your monthly bills with passive income? Real estate investment trusts, like Northern Property REIT (TSX:NPR.UN) and Northwest Healthcare Properties REIT (TSX:NWH.UN), offer 8-9% yields.

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Anyone would just love to boost their income. You can get passive income from real estate investment trusts (REITs) that own a portfolio of real estate properties. Your investments would immediately be diversified geographically due to that characteristic.

These two selective REITs offer above-average yields that are mouth watering to retirees and anyone else who just wants to pay their bills with passive income that regularly shows up in their accounts.

Residential REIT yielding 7.9%

Northern Property REIT (TSX:NPR.UN) owns residential properties in resource-rich areas. That’s primarily why its shares are over 28% off of its 52-week high of $29. Today at $20.70 a unit, it yields 7.9%.

The shares are down because commodity prices are at lower levels than last year. Still, its payout ratio is around 70%, so its distribution has a margin of safety. Further, the REIT has a history of maintaining and growing its distributions. From 2002 to the present, it hasn’t once cut its distribution, but has increased it seven times in the 13 years. It last increased it by 3.1% in November 2014.

If it successfully acquires True North Apartment REIT Trust, it would be more diversified in the central and eastern parts of Canada, and Northern Property REIT will be renamed to Northview Apartment REIT.

Healthcare REIT yielding 9.3%

Northwest Healthcare Properties REIT (TSX:NWH.UN) is a global REIT that owns hospitals and medical office buildings in Canada, Brazil, Australasia, and Germany. The aging population around the world is growing, and investing in this REIT is a good way to capitalize on that.

At the end of July this summer, the REIT implemented a normal course-issuer bid program to cancel up to 10% of common shares. At that time of the announcement, the shares were around $7.80 per unit. Today, the shares have already risen by 10.3%. Still, at about $8.60 per unit, it provides a high income of 9.3% yield.

Its payout ratio is at the high end of the spectrum at 95%, but the REIT has been maintaining a high occupancy level of 94%. If investors decide to buy it, keep track of its occupancy level.

The best place to buy and hold REITs

If you’re looking to access the high income freely, the best place to buy and hold them would be in TFSAs. That way, you don’t need to worry about tax reporting, which could get a little complicated.

REITs pay out distributions that are not taxed like dividends. If you hold them in a non-registered account, you’ll need to visit the corporate website for more information on how the distribution is treated for tax-reporting purposes.

Sure, you can buy and hold REITs in RRSPs, but you won’t be able to access the monthly income with no consequence. Assuming investors are looking for high income to pay the bills, the best place to buy and hold REITs would be in a TFSA.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.


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