Here’s a Safe Canadian Health Care REIT for Your TFSA

Chartwell Retirement Residences REIT (TSX:CSH.UN) is a health care REIT that provides a 4.75% yield for tax-free TFSA income.

| More on:

Investors are pretty passionate about their TFSAs. And rightly so, as this Canadian investment account can provide us with tax-sheltered income today and into the future, as unlike the RRSP, withdrawals are tax-free no matter when they are made.

The TFSA limit is up to $63,500 today, and with the new year fast approaching, we will likely have another $6,000 to add to this limit. So this is a good time to think about what investments to add to our TFSA for long-term, reliable income.

Chartwell: a REIT with staying power

Chartwell Retirement Residences REIT (TSX:CSH.UN) is the largest provider and owner of seniors housing communities, ranging from independent living to long-term care. We know that the population is aging, we know that senior communities are on the rise, and we know that Chartwell has been addressing this market with much success.

Furthermore, with increased life expectancy and a population that is wealthier than ever before, Chartwell’s business is well-positioned to continue to thrive. With retirement residences that offer independence, a wide array of services, and care and support when that is what’s needed, Chartwell is a real and valid choice for seniors looking for living and life solutions.

Occupancy recovering from a bump in the road

Occupancy levels have taken a hit in the last couple of years, and as they were hit down to today’s levels of just below 90% (from levels of well above 90%). New competition from the likes of Revera and Sunrise homes, especially in the Ontario and Quebec markets, have taken their toll. Chartwell believes, as I do, that the increase in demand from the aging population will boost demand so that Chartwell will recover to better occupancy levels.

Expanding the network

Along with increased competition, Chartwell was also hit by reduced occupancy levels in its properties that were recently acquired, newly developed, and that have had significant redevelopment. There are 19 such properties that management expects will achieve a stabilized occupancy level of 95%, boosting results in the quarters to come.

Dividend income galore

Chartwell currently offers shareholders a dividend yield of 4.25%, and is coming off four consecutive years of dividend increases that have been possible because of the solid fundamentals of its business. This positive position starts with the aging population. According to recent statistics, the next 20 years will see the number of Canadians aged 75 to 85 increase at a rate that is three to four times greater than the general population.

Foolish bottom line

Chartwell REIT continues to provide reliable income to investors, and those who have stuck with the REIT over the longer term have also generated substantial capital gains from their investment. Because I like to look at long-term performance, I will point out that Chartwell REIT’s 10-year price return is 137%. This does not include dividends, which have added another almost $6 per share in dividends over this time period, or another approximately 100% return. So total return exceeds 200%.

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 Karen Thomas has no position in any of the stocks mentioned.

More on Dividend Stocks

woman retiree on computer
Dividend Stocks

1 Reliable Dividend Stock for the Ultimate Retirement Income Stream

This TSX stock has given investors a dividend increase every year for decades.

Read more »

calculate and analyze stock
Dividend Stocks

8.7% Dividend Yield: Is KP Tissue Stock a Good Buy?

This top TSX stock is certainly one to consider for that dividend yield, but is that dividend safe given the…

Read more »

grow money, wealth build
Dividend Stocks

TELUS Stock Has a Nice Yield, But This Dividend Stock Looks Safer

TELUS stock certainly has a shiny dividend, but the dividend stock simply doesn't look as stable as this other high-yielding…

Read more »

profit rises over time
Dividend Stocks

A Dividend Giant I’d Buy Over TD Stock Right Now

TD stock has long been one of the top dividend stocks for investors to consider, but that's simply no longer…

Read more »

analyze data
Dividend Stocks

Top Financial Sector Stocks for Canadian Investors in 2025

From undervalued to powerfully bullish, quite a few financial stocks might be promising prospects for the coming year.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

3 TFSA Red Flags Every Canadian Investor Should Know

Day trading in a TFSA is a red flag. Hold index funds like the Vanguard S&P 500 Index Fund (TSX:VFV)…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

1 Magnificent Canadian Stock Down 15% to Buy and Hold Forever

Magna stock has had a rough few years, but with shares down 15% in the last year (though it's recently…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

Earn Steady Monthly Income With These 2 Rock-Solid Dividend Stocks

Despite looming economic and geopolitical uncertainties, these two Canadian monthly dividend stocks could help you generate reliable income in 2025…

Read more »