2 Real Estate ETFs That Can Carry You to Retirement

Get massive growth with these two ETFs and get paid passive income while you wait…

| More on:
Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House

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

Passive income is a fantastic way to build wealth. It could be defined as a way to earn money while not actually working. Passive income can be created in many ways, but real estate investing is one of the most popular.

The idea of passive income is one that should be appealing to any investor. When being paid passive income, you are technically being paid to sleep.

Downsides of real estate investing

With real estate investing, there are many ways to build passive-income streams. In fact, there are so many that it can be difficult to choose which way works for you. Some methods require you to be a landlord, which isn’t true passive income and can come with a lot of issues. It can require constant work and a lot of your time just to break even.

By far the easiest way to get into real estate investing is by buying real estate investment trusts, or REITs. There are many REITs to pick from, and all of them have different strategies for creating wealth.

Picking individual REITs can be a daunting task, and it may seem overwhelming to pick a winning one. Although quality REITs do exist, like Choice Properties and SmartCentres, you can never guarantee they’ll keep winning.

Solution to real estate investing

The issue of picking REITs and creating reliable passive income is why I want to introduce you Fools to two of my favourite REIT exchange-traded funds (ETFs).

CI First Asset Canadian REIT ETF (TSX:RIT) and BMO Equal Weight REITs Index ETF (TSX:ZRE) are two REIT ETFs that aim to do similar things through slightly different strategies. They both pay respectable dividends, with CI First Asset’s Canadian REIT ETF (CI) paying a 4.3% yield and BMO’s Equal Weight REITs Index ETF (BMO) paying 4.1%.

CI has a slightly higher management expense ratio (MER) of 0.9% compared to BMO’s MER of 0.61%.

Investing in CI will offer you an actively managed fund, which has a history of higher returns and a high yield. It also comes with a slightly lower beta of 0.51 compared to BMO’s 0.58.

CI has the ability to move in and out of REITs as it sees fit, which can offer downside protection as well as more upside. The history of higher returns, lower beta, and higher yield seem more than enough for me to justify the higher MER.

BMO  aims to match the performance of the Solactive Equal Weight Canada REIT Index. While this has some benefits, such as having equal exposure to all sectors of REITs, the risk of missing potential gains may outweigh the benefits to potential investors.


Both REIT ETFs have great potential for growth. If you’re looking for higher passive income, then BMO may be for you, considering its lower MER. Therefore, it works out to pay slightly more cash every year. However, CI is, overall, a better pick due to its lower beta, higher historic growth, and ability to change asset allocation. As always, these are not recommendations. Take this information as a start to your own research.

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 Everett Taves has no position in the companies mentioned.

More on Investing

think thought consider
Energy Stocks

Energy Stocks Dip: To Buy or Not to Buy?

Most energy stocks are risky investments, because of their unpredictable profitability. Investors should tread carefully.

Read more »

Female hand holding piggy bank. Save money and financial investment

New Investors: 1 Cheap Canadian Bank Stock to Start a TFSA Retirement Fund

National Bank of Canada (TSX:NA) is a bargain Canadian bank stock that new investors should consider loading up for their…

Read more »

Road sign warning of a risk ahead

1 Canadian Oversold Stock for High-Risk Investors

Is it a good time to buy high-risk stocks? This oversold stock could double your money if it withstands the…

Read more »

Target. Stand out from the crowd

2 Canadian Growth Stocks to Buy Amid the Correction

Canadian growth stocks are trading at attractive valuations as the broader market pullback continues.

Read more »

analyze data
Tech Stocks

Fantastically Cheap TSX Tech Stocks

Investors should benefit from buying cheap tech stocks that are growing their profits in this market correction.

Read more »

Dividend Stocks

TFSA Dividend Income: 2 TSX Stocks to Buy on the Pullback

These TSX stocks look oversold and pay attractive dividends that continue to grow.

Read more »

Wireless technology
Tech Stocks

2 Quality Growth Stocks Breathe Life Into the Tech Sector

The battered technology sector has been advancing lately thanks to two quality growth stocks with pricing powers.

Read more »

edit Sale sign, value, discount

2 Ridiculously Cheap TSX Stocks I’m Looking to Buy in This Market Correction

Canadian investors will want to pick up shares of these two discounted TSX stocks before it’s too late.

Read more »