If you’re a fan of real estate investment trusts (REITs), but can’t figure out which one to buy today, then you’ve come to the right place. I’ve scoured the industry and selected three great options with high and safe yields up to 9.2%, so let’s take a quick look at each to determine which would be the best fit for your portfolio.
1. RioCan Real Estate Investment Trust
RioCan Real Estate Investment Trust (TSX: REI.UN) is Canada’s largest REIT with a total enterprise value of approximately $16 billion and ownership interests in 303 retail and mixed-use properties across Canada and the United States that total approximately 46 million square feet. It pays a monthly distribution of $0.1175 per share, or $1.41 per share annually, which gives its stock a yield of approximately 5.2% at today’s levels.
Investors must also make the following two notes.
First, RioCan has maintained its current annual distribution rate since 2013.
Second, I think the company’s increased amount of adjusted funds from operations (AFFO), including its 5.1% year-over-year increase to $0.41 per share in the first quarter of fiscal 2016, and its reduced payout ratio, including 86% of its AFFO in the first quarter compared with 90.4% in the same period a year ago, will allow it to raise its distribution before the end of the year.
2. Dream Global REIT
Dream Global REIT (TSX:DRG.UN) is one of Germany’s largest owners and operators of commercial real estate with 203 properties that total approximately 13.5 million square feet. It pays a monthly distribution of $0.06667 per share, or $0.80 per share annually, which gives its stock a yield of approximately 9.2% at today’s levels.
Investors must also make the following two notes.
First, Dream Global has maintained its current annual distribution rate since it went public in 2011.
Second, I think the company’s consistent amount of AFFO, including the $0.20 per share it generated in the first quarter of fiscal 2016, and its modest cash payout ratio, including 87.3% in the first quarter, will allow it to continue to maintain its current distribution rate going forward.
3. Allied Properties Real Estate Investment
Allied Properties Real Estate Investment (TSX: AP.UN) is one of Canada’s largest owners of commercial real estate with 150 office properties across the country that total approximately 10.5 million square feet. It pays a monthly distribution of $0.125 per share, or $1.50 per share annually, which gives its stock a yield of approximately 4.2% at today’s levels.
Investors must also make the following two notes.
First, Allied Properties has raised its annual distribution for four consecutive years, and its 2.7% hike in December has it on pace for 2016 to mark the fifth consecutive year with an increase.
Second, I think the company’s ample amount of AFFO, including the $0.44 per share it generated in the first quarter of fiscal 2016, its modest payout ratio, including 84.8% of its AFFO in the first quarter, and its growing property portfolio, including the addition of eight properties over the last year and its $218 million acquisition of five properties that it expects to close by the end of this month, will allow its streak of annual distribution increases to continue for the next several years.
