If you’re a young working professional, there are plenty of avenues to spend a $5,000 bounty.
Living in a consumer society, buying the best and newest electronic gadget, booking a vacation, or throwing a grand party are some of the most obvious choices for millennials these days.
But I’ve a great alternative to consumerism. With a little discipline, you can use those $5,000 to start saving in your Tax-Free Saving Account (TFSA) by buying stocks which’ll pay you monthly dividend.
Real estate investment trusts, or REITs, often pay heft returns to investors because they’re required by law to pay most of their earnings to shareholders.
Investing in REITs means you can own a piece of real estate without becoming a landlord. REITS own and manage properties like apartment buildings, office spaces, and shopping malls. So, if you’re ready to use $5,000 for your future savings, here are three REITs I’d recommend.
1. RioCan Real Estate Investment Trust (TSX:REI.UN) owns and manages the country’s largest portfolio of retail focused and mixed-use properties with ownership interests in a portfolio of 299 properties, containing an aggregate net leasable area of 45 million square feet.
RioCan stock is my top pick for new investors because it manages incredible portfolio of tenants, including Wal-Mart, Canadian Tire and Cineplex. These tenants are going nowhere as long as we live a normal life.
RioCan pays a monthly distribution of $0.1175 per unit, or a 5.9% annualized yield. The most important performance metrics that investors use to analyze the performance of any REIT is its ability to maintain the cash flows to pay its unitholders. Since its first distribution in 1994, RioCan has never missed a monthly dividend payment.
2. H&R Real Estate Investment Trust (TSX:HR.UN) is Canada’s largest diversified REIT with total assets of approximately $14.1 billion. H&R REIT runs a portfolio of high-quality office, retail, industrial, and residential properties comprising over 46 million square feet.
H&R REIT has exposure in both Canada and the U.S. with 33% of its assets located in south of the border.
H&R pays an attractive 6.42% dividend yield, which translates into a $0.1066-a-share monthly distribution. The company’s payout is both attractive and secure enough to make the second-largest Canadian REIT a part of your TFSA portfolio.
3. Chartwell Retirement Residences (TSX:CSH.UN) fits very well in this strategy If you want to play more safe and want to diversify your investment away from apartments and commercial units.
Chartwell is the largest operator in the Canadian senior living space, managing over 175 locations across four provinces in Canada. As the Canadian population ages, investing in retirement residences and long-term care facilities is probably one of the best strategies in the real estate sector.
This REIT pays a stable monthly distribution of about $0.048 per unit, up 7% over the past five years. At the time of writing, the payout provides an annualized yield of 3.93%.
Chartwell is expanding fast. It’s completed a number of important developments and acquisitions this summer that will contribute to its future growth and cash generation for long-term TFSA investors.
