Whether you want to grow your TFSA in value or just want to add some recurring monthly income to your portfolio, real estate investment trusts (REITs) are great option for investors. With a great deal of predictability in their earnings and cash flow, they can provide lots of consistency.
Below are three REITs that investors can earn some solid dividend income from today and that could be ideal investments for the long term.
Plaza Retail REIT (TSX:PLZ.UN) has provided its investors with some good returns so far in 2019. Not only does the stock pay a dividend yield of 6.2%, but it has also risen by around 15% year to date. The company is coming off an impressive quarter that saw its profits more than double from the previous year. While this was mainly attributed to fair value increases, as property values continued to rise, there could be more of those adjustments in the future.
While it’s understandable if investors are more than a little hesitant getting involved in a REIT that has retail properties, more than 90% of the company’s gross rent comes from big national retailers. And with occupancy rates north of 96%, there isn’t a whole lot of room that’s vacant in Plaza’s portfolio.
That’s great news for investors that want some stability and helps offset some of the risk involved.
True North Commercial REIT (TSX:TNT.UN) is more suitable for investors who are a bit more risk-averse and don’t want lots of exposure to retail tenants. True North has much more stability in its portfolio, as some of its key anchors include both the federal and provincial governments. It’s hard to get much safer than that.
The company is also making moves to gear itself even more toward safe tenants. In October, True North announced it was going to acquire an office property in Markham, Ontario, and another in Calgary, Alberta.
According to the company’s media release, once the acquisitions are completed, “gross revenue from government and credit-rated tenants is expected to increase from 79% to 82% and the weighted average remaining lease term will increase from 4.0 years to 4.6 years.”
That’s music to the ears of investors, and that makes this 8.3% yield that much more attractive.
Automotive Properties Real Estate Investment Trust (TSX:APR.UN) gives investors yet another type of REIT to invest in. With a portfolio that focuses on automotive dealerships, this REIT is also full of big tenants that aren’t likely to suddenly pack up and leave. For one thing, it would be difficult for them to do so given that the company’s weighted average lease term is well over 13 years, helping to make Automotive Properties a bit more resilient even if a recession happens and dealerships do end up struggling.
Over the long term, however, dealerships will likely continue to perform well, especially as the population continues to grow and more new drivers are in search of vehicles. That’s why, while there may be some risk from investing in this REIT over the near term, it still presents a good long-term investment. And with a dividend yielding around 7%, it’ll also be a great source of cash flow for investors as well.
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 David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AUTOMOTIVE PROPERTIES REIT.