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Happy 10-year anniversary, TFSA! If you were of age in 2009 (you were born in or before 1991), you should have at least $63,500 in cumulative room in your TFSA. If you’ve neglected your TFSA and are finally ready to make up for lost time, you can turn such your $63,500 sum into a reliable, durable, and growing tax-free income stream that can pay you around $300 a month to start.
To get such a monthly stream, you’ll need to invest the funds in a security with a yield of 5.5%. And when it comes to reliable income streams with yields near 5.5%, it’s tough to beat CT REIT (TSX:CRT.UN), the resilient real estate play that, as you may have guessed, is behind the vast footprint of Canadian Tire stores that are located across the country. CT REIT isn’t just a leasor of properties to Canadian Tire though; it’s so much more.
The REIT isn’t just there to collect rent from Canadian Tire-owned stores. It has a long-term plan to grow its property portfolio and increase AFFOs while leveraging the traffic that moves in and out of one of the most cherished retailers in the country. When it comes to driving rents higher, it’s all about location, location, location.
When I say location, it’s not just about the physical location of a property or its closeness to urban hot spots. It’s also about a property’s location relative to mutually beneficial neighbours. And when it comes to new developments, CT REIT has the advantage of being able to command higher-than-average rents because being close to a Canadian Tire store is sought after through the eyes of prospective tenants.
Whether you’re another retailer who’s looking to get in on the traffic that the Canadian icon brings through the area or a residential tenant who values the convenience of having a Canadian Tire within walking distance, the sheer fact that CT REIT is a leasor to Canadian Tire is a considerable advantage.
In a prior piece, I’d noted that CT REIT was “the perfect way to feast on the traffic going through Canadian Tire stores without the indigestion of margin-eroding competition.” As CT REIT looks to diversify its tenant base, I think there’s ample opportunity for above-average AFFO growth. It’s tough to be a retail REIT these days, but if you’ve got a Canadian icon on your side, it’s a heck of a lot easier to prosper.
Management describes itself as “reliable, durable, growing.”
If you’ve got the room in your TFSA, let CT REIT provide you with these three desirable traits.
Stay hungry. Stay Foolish.
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Fool contributor Joey Frenette has no position in any of the stocks mentioned.