2 Must-Own Quality REITs for a Lifetime of Passive Income

The Choice Properties stock and the SmartCentres Stock are must-own REIT stocks. You start building a foundation for wealth with these two dividend machines.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The rich get richer because of passive income. Active or regular income is what you receive as payment for work or services rendered. Passive income is the stream of income you receive without much effort. You let your money work for you by investing in income-producing stocks.

You can belong to the wealthy class in Canada through quality real estate investment trusts (REITs). Choice Properties (TSX:CHP.UN) and SmartCentres (TSX:SRU.UN) are a pair of must-own REIT stocks if you want a shot at being wealthy for life.

Incredible return

The fascinating part of owning both REIT stocks is that you’re not a physical landlord. You can sleep while your money grows or do other important stuff.

Also, you don’t have to explore other avenues to earn. You’ll be receiving a lifelong, growing passive income from both stocks.

Choice Properties will endow you incredible returns with its 5.5% dividend. If recession or inflation worries you, don’t despair. This REIT stock is surefire protection. The dividends are likewise safe because of its necessity-based tenants.

Loblaw, the largest food retailer in Canada, is Choice Properties’ principal and the anchor tenant in its highly-diversified real estate portfolio. To date, this $4.22 billion REIT owns and manages a total of 726 properties consisting of retail, industrial, office, and residential assets

Nearly 79% of the entire properties are Loblaw stores. You’ll assure yourself of growing passive income, as Choice Properties is practically the king in the rental space with its exceptional occupancy rate of 97.4%. The affiliation and long-time partnership with Loblaw is the main reason why Choice Properties is a quality investment.

Lavish payback

SmartCentres is the other REIT that matches the quality of Choice Properties. If Loblaw is the prime tenant of Choice, Walmart is the anchor tenant of SmartCentres.

This $5.34 billion REIT is also a perfect hedge against inflation and defense versus recession. Aside from the Walmart-anchored tenants, value-oriented retailers and prominent national and regional names are among the tenants. SmartCentres generate recurring and stable cash flows even in a slowing economy.

This pre-eminent real estate stock has a slightly higher yield of 5.85%. A $25,000 investment will pay you back with a $1,462.50 annual passive income. Rich people with $500,000 today can double their wealth in less than 12.5 years.

In short, the principle of compounding will take effect the longer you hold SmartCentres and keep reinvesting the dividends.

Importance of passive income

Choice Properties and SmartCentres are the undisputed dividend monsters in the real estate space. Both REITs are financially healthy and strong because of the high-profile tenants.

An equal $10,000 investment in each stock can automatically result in a $1,135 passive income. In the beginning, you might find the return very little. But as time goes by, you’ll realize that you’re building the foundation for wealth.

You can no longer overlook the importance of passive income if you know that there are quality REITs that can deliver a lifelong of growing passive income.

Billionaire Warren Buffett defines passive income this way: “If you don’t find a way to make money while you sleep, you will work until you die.”

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 Christopher Liew has no position in any of the stocks mentioned.

More on Dividend Stocks

Tech Stocks

Got $300? 2 Simple TSX Stocks to Buy Right Now

These two TSX stocks aren’t as popular as other names, but they are smart buys right now because both are…

Read more »

Increasing yield
Dividend Stocks

3 TSX Stocks With High Dividend Yields

Not all stocks with high-dividend yields are great buys. Here are three stocks to consider for your portfolio today.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

Dividend Lovers: 2 U.S. Stocks to Power Up Your Portfolio

Dividend investors in Canada can consider buying these two top U.S. stocks right now to diversify their portfolios and get…

Read more »

Growth from coins
Dividend Stocks

2 TSX Stocks to Buy With Dividends Yielding More Than 3%

Here are two TSX stocks to buy today with dividends yielding more than 3%!

Read more »

growing plant shoots on stacked coins
Dividend Stocks

TFSA Passive Income: Earn $317 Every Month Tax Free for Life

By leveraging A TFSA, Canadians can earn a tax-free passive income of $317 every month for life.

Read more »

edit Close-up Of A Piggybank With Eyeglasses And Calculator On Desk
Dividend Stocks

2 Cheap TSX Dividend Stocks to Buy Now for a TFSA or RRSP

TFSA and RRSP investors can now buy top TSX dividend stocks at cheap prices for portfolios focused on passive income…

Read more »

Man data analyze
Dividend Stocks

Have $1,000? 2 All-Weather Dividend Stocks to Buy and Hold Forever

Canadians with $1,000 to invest can buy two all-weather dividend stocks today and hold them forever.

Read more »

office buildings
Dividend Stocks

2 Stocks to Invest in U.S. Real Estate

Do you need more income? Consider diversifying your real estate portfolio to the south via value U.S. REITs.

Read more »