REITs are known for generous dividend payouts. But very few REITs manage to keep increasing dividend payouts for more than a couple of years. Choice Properties REIT (TSX:CHP.UN) and SmartCentres REIT (TSX:SRU.UN) are two companies that are outliers in this regard. Both REITs are Dividend Aristocrats and provide juicy yields.
One of the largest REITs in the country
Choice Properties REIT has a portfolio consisting of 726 properties, spanning over an area of 65.6 million square feet. About 95% of the properties owned by the REIT are retail and industrial, while the rest are offices and residential.
As the majority of the portfolio is composed of necessity-based clients who don’t move around a lot, the company’s revenue streams are pretty solid.
But a steady business model and fixed income streams don’t mean that Choice Properties isn’t growing as a company. Rather, the company increased its market value by 18.4% in the last year.
The best numbers about Choice Properties are its dividends. The company increased its dividends for three consecutive years, earning itself the title of a dividend aristocrat. The current yield is a juicy 5.39% and the payout ratio of 31.69% is unusually low for a REIT.
Good dividend history, fantastic growth, and a highly dependable revenue stream; these elements make Choice Properties a stock that you can hold for a very long time. Currently, the company is trading at $13.95 per share at writing.
A fully integrated real estate provider
The current SmartCentres REIT is the result of a 2015 merger of Calloway REIT and SmartCentres Inc. The company focuses on merging physical stores with e-commerce, providing a richer experience to the consumers.
The company has many reputable and long-standing tenants, but Walmart can be considered SmartCentres’s core tenant. It anchors well over two-thirds of the company’s total properties.
As a dividend payer, SmartCentres has even more to offer. The REIT has increased its payouts for seven consecutive years. In the past five years, the company has increased its yearly dividends from $1.61 to $1.85 per share. Currently, the dividend yield is a mouth-watering number of 5.94%.
The current market value of the company is the monthly low of $31.15 per share at writing. It doesn’t represent much of growth, but steadily increasing dividend payouts, a futuristic business model, and reliable tenants are enough reasons to earn SmartCentres a permanent place in your investment portfolio.
High-yield dividend stocks held for a long time are a potential gold mine, thanks to the power of compounding interest.
If you evenly split your fully-stocked TFSA ($69,500) between SmartCentres and Choice Properties and keep up the yearly contribution of $6,000, the two stocks will get you half a million dollars in 23 years. This is an example only, and you should diversify your TFSA to more than just two stocks.
If you hold on to the stocks for a longer time, you stand at a chance of becoming a millionaire in 34 years — and that’s only with dividends and compounding, not adding capital gains to the equation.
So if you are looking for high-yield rock-solid stocks that you can buy and forget about, SmartCentres and Choice Properties deserve your consideration.
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.