Investing in housing stocks or so-called real estate investment trusts (REITs) is not a bad idea. REITs are like value stocks because they also provide investors with an income stream and higher long-term total returns. The stocks are better options than newly listed companies or even tech startups.
If you want to include real estate holdings in your portfolio, buy REIT stocks. Slate (TSX:SRT.UN), True North (TSX:MRT.UN), and Northview (TSX:NVU.UN) are not only the best REITs today, but they are also the among the highest dividend payers on the TSX.
You’ll be invested in residential, commercial, and industrial income-producing real estate properties. As landlords, you will find the rental payments received by these REITs are stable. And since REITs are required to distribute 90% of taxable income to shareholders annually, investors will receive a steady passive income.
Slate and True North are the ideal picks for budget-conscious investors. Both stocks are not only trading at affordable prices, but they are also paying generous dividends.
Slate is a leading investor in the U.S. commercial real estate market. The REIT owns a total of 83 properties, of which 100% of the tenants are grocery stores. Since many of the tenants are also large and pre-eminent grocery retailers, rental growth is embedded in Slate’s retail assets or portfolio.
In the recent Q2 2019, which ended on June 30, 2019, the $551 million REIT reported robust numbers. Slate generated $35.6 million in gross revenue with a corresponding 1.8% growth in total net operating income (NOI). Management expects the same revenue in the third quarter while maintaining a 95% occupancy rate.
True North is just as attractive as Slate. The 46 properties in the portfolio are in urban and select strategic secondary markets across Canada. Rental payments are secure because True North is discriminating in its choice of tenants. The REIT is focused on long-term leases with government and credit-rated tenants.
The financial results in Q2 2019 are equally impressive. True North’s revenue increased $5,587 by 28% from the same period in 2018, complemented by a 27% increase in NOI. This REIT has an occupancy rate of 96% as of June 30, 2019.
Slate and True North put emphasis on nurturing and maintaining strong tenant relationships to ensure retention and lease renewals. Investors will be delighted with the dividend yields of these REITs. Slate pays 8.8%, while True North offers 8%.
Ultimate housing stock
Northview is the ultimate housing stock. This $1.87 billion REIT has 27,000 residential suites located in eight provinces and two territories in Canada. The portfolio consists of multi-family residential properties including apartments, townhomes, and single-family apartment buildings.
Canada’s third-largest publicly traded multi-family REIT also owns and manages executive suites and hotels that are rented for shorter periods from a few days to several months. There are some commercial properties across Canada, too.
Northview’s strategy is to be present in the largest urban centres and key secondary markets in Canada. Other properties are situated in key centers for commodity-based industries. Because of the diverse property locations, the REIT is assured of stability and profit growth. Northview is a cash cow with a 6% dividend yield.
If you want to become a mock landlord and earn a decent passive income, investing in any of these three REITs will get you there.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned.