Make $400/month in Passive Income With These REITs

Use Granite Real Estate Investment Trust (TSX:GRT.UN) and Choice Properties Real Estate Investment Trust (TSX:CHP.UN) to make a sizable passive monthly income.

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Are you tired of being stuck with whatever amount your employer pays you every month? You can always ask for a raise from your boss, but that hardly ever works. Even if you get a raise, there is no guarantee it will be a satisfactory one. Plenty of companies tell employees that their salaries will increase based on their annual performance, but most do not.

While I do not want to claim it as a fact, the chances are that you are reading this article because you had accepted a decent position in a company a few years ago. You started the job at a respectable salary, which was adequate at the time. But you have not seen a raise in a long time.

If you want to add to your monthly income, I have some excellent news for you. You can start building up sources of passive income by creating an investment portfolio, which consists of dividend-paying stocks. A lot of dividend payouts are not guaranteed, but if you choose the right ones, you can get reliable payouts every month.

Real estate investment trust (REIT) stocks, in my opinion, are the best way to create a substantial monthly income stream. REITs are required to pay shareholders dividends.

Let us take a look at Granite Real Estate (TSX:GRT.UN) and Choice Properties Real Estate (TSX:CHP.UN). These two REITs can help you make a solid $400/month in passive income through dividend payouts.

Solid as a rock

There are plenty of stable REITs to choose from, but there is none more so than Granite Real Estate. Granite is a $3.19 billion Canada-based REIT, with 85 investment properties. The REIT’s assets consist of logistical and industrial properties. Granite has a global presence with a healthy yield of 4.48%.

To give you a clear picture, if you invest $60,000 in Granite, you can expect a yearly income of $2,688. This amount annually is easily an income of around $224/month right there. I would say that it is not a bad start.

There is also the chance of getting substantial capital gains. Granite is considered to be an undervalued REIT. At $64.62 per share, Granite is a consistent REIT with solid potential, and a stock you should consider adding to your portfolio for a steady, passive monthly income.

Intelligent choice

Another top REIT choice to add to your portfolio is Choice Properties. The real estate company is having a great year so far, as the share prices are up 25%. Choice Properties is trading at near 52-week highs at $14.47 per share at the time of writing. There are a few reasons why you should be in love with this stock.

Choice Properties currently owns 68 million square feet of gross leasable area and 756 properties. The Q2 2019 ended June 30, and the earnings report saw the company announce a $238.3 million net income loss. Compared to the $321.1 million year over year, this was a massive improvement.

The company’s operating cash flow increased to $186 million, while the funds from operations improved to a substantial $170 million. CEO Rael Diamond announced that he is quite happy with the financial and operational performance of the REIT.

Choice Properties is making substantial capital gains, and these gains have the backing of a high-quality portfolio. The REIT has a steady cash flow bolstering the capital gains, and the dividend yield of 5.2% is the real icing on the cake.

How to make $400/month

Granite and Choice Properties shares currently trade at $64.42 and $14.74, respectively. Based on the dividend yields, Granite will pay investors $2.8 per share, and Choice Properties will pay investors $0.72 per share.

If you invest $55,272.36 in Granite, you can obtain 858 shares. These shares will provide you an annual return of $2,402.4, or a monthly income of $200. Investing $49,143.16 in Choice Properties stocks can provide you with 3,334 shares in the REIT; 3,334 shares of Choice Properties can give you an annual income of $2,400.48, or a monthly income of $200.

Combined, the monthly dividend payouts from both of the REITs can result in a healthy passive income of an additional $400/month.

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.

Fool contributor Adam Othman has no position in any of the stocks mentioned.

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