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Canadians: 3 TSX REITs That Will Ensure Passive Income in 2020

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Stock markets around the world are shaky because of coronavirus concerns. By February 28, the S&P 500 recorded its worst week since the 2008 financial crisis. From the looks of it, it’s unlikely that matters are going to change. The IMF has cut down its growth expectations from China as well. Brent oil has dipped below $50. All in all, these are not very encouraging signs for 2020.

While this is bad news for most stockholders, it also creates a buying opportunity for good-quality stocks. Matters work out well if the concerned stocks pay out juicy dividends as well. Here are three stocks in the real estate space that I recommend because of the dual benefits of quality and high yield.

Dream Industrial REIT (TSX:DIR.UN) just reported its figures for the fourth quarter and full year for 2019, and the numbers look good. Net rental income for the three months and year ended December 31, 2019, was $36.2 million and $139 million, respectively. This meant that revenue rose 20.2% year over year in Q4 of 2019 and 21.7% year over year in 2019.

Occupancy rates in the December quarter stood at a robust 94.9%, and the REIT has a net debt-to-adjusted EBITDA of 4.3, which reflects $442 million in cash balance at year-end.

The company also announced aggressive plans for Europe. In January, it announced an expansion into the European industrial market with the acquisition of approximately $327 million of assets in the Netherlands and Germany. Since the end of 2019, Dream Industrial has completed or is in advanced negotiations on acquiring $152 million of assets in the Greater Toronto Area, Kitchener, and Montréal in Canada.

The best part of Dream Industrial is its monthly dividend payout of 5%. The stock trades at $12.65, and analysts have given it a target of $14.94 — an increase of over 10% from the current price.

Artis REIT is trading at $12.06 and has a forward dividend yield of 4.5%. This is another REIT to consider for regular passive income. It has reported portfolio occupancy of 91.5% (93.4% including commitments) as of December 31, 2019.

Artis had to cut its dividend by 50% in 2018. It also divested non-core assets and restructured its balance sheet. However, while investors were worried about the long-term performance of this REIT, Artis managed to successfully stage a turnaround and was one of the top-performing REITs last year with an 18% gain in stock price.

Artis’s portfolio has a stable lease expiry profile with 45.6% of gross leasable area expiring in 2024 or later.

Northwest Healthcare Properties is another REIT with a mouth-watering dividend yield of 6.5%. The company is headquartered in Canada but has operations across the world with over 40% of its business coming in from the Australasian region. It has an occupancy rate of 96% in Canada and 98% in international markets.

Healthcare as a sector will only go up as populations age and Northwest is perfectly poised to reap those benefits. It trades at $12.47 right now, and analysts have given it an average target price of $13.1 in the next 12 months. It’s a solid pick for your income portfolio.

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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.

The Motley Fool recommends DREAM INDUSTRIAL REIT and NORTHWEST HEALTHCARE PPTYS REIT UNITS. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

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