3 REITs Are Money Makers This Summer and Beyond

Investors should consider REITs for stable and income durability in the summer of 2021 and beyond. Slate Grocery stock, NorthWest Healthcare Properties stock, and SmartCentres stock are the money makers.

| More on:
Pixelated acronym REIT made from cubes, mosaic pattern

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 pandemic environment and the uncertainties around it call for drastic action if you’re an income investor. Rebalancing your portfolio in the summer and moving to safer assets like real estate investment trusts (REITs) is the best move. Three top REITs are money makers with their generous but safe dividend payments.

Necessity-based tenancy

Grocery-anchored REITs are resilient assets in the pandemic environment. Slate Grocery (TSX:SGR.U) is a must-buy if you have money to invest this summer. Besides its credit-rated tenants, this $603.95 million REIT pays an ultra-high 8.40% dividend.

The real estate assets of Slate Grocery are 99% grocery-anchored, and the locations are in 20 states in major metro markets in the United States. About 65.7% of the total 80 properties are essential tenants. People rely on them for their daily needs. The REIT’s niche selective investment approach and necessity-based tenancy emphasize capital preservation and outsized returns.

Kroger and Walmart comprise 17.1% of the entire tenant base. In Q1 2021 (quarter ended March 31, 2021), Slate’s revenue growth versus Q1 2020 was 1.3%. However, net income rose 981.6% on a 93.1% occupancy rate. The contractual rent collections were 96%. At $12.75 per share, Slate Grocery is a steal.

Continuing geographic expansion

NorthWest Healthcare Properties (TSX:NWH.UN) has been a dividend machine during the pandemic. This $2.78 billion landlord is the only REIT in the cure sector. Its real estate portfolio consists of healthcare infrastructures such as hospitals, medical office buildings, and clinics.

The REIT trades at $12.93 per share and pays a high 6.19%. If you’re looking for durable, stable cash flows, NorthWest is the logical choice. Management is well positioned to execute its key priorities to cement its position as the leading global healthcare real estate asset manager.

Currently, NorthWest has 186 income-producing companies with a weighted average lease expiry of 14.3 years. The occupancy rate stands at 97%. The top priorities for the rest of 2021 are to scale the REIT’s global asset management platform, expand geographically, and optimize the balance sheet.

In Q1 2021, NorthWest completed accretive acquisitions worth $69.3 million in Canada, Europe, and Australasia. It hopes to complete $365 million worth of development projects between Q4 2021 and Q4 2023.

Reshaping the urban and urban-suburban landscape

SmartCentres (TSX:SRU.UN) is also an excellent dividend play. This $5.03 billion REIT trades at $29.56 per share and offers a 6.26% dividend. It’s also one of the top-performing real estate stocks thus far in 2021, with its 32.5% year to date. The REIT is Canada’s largest developer and operator of unenclosed shopping centres.

SmartCentres’s tenant base is equally impressive, with Walmart, Loblaw, Metro, and Costco among the anchor tenants in the 157 properties. Residential development is also a key priority in 2021 and beyond. Over 15,000 pending applications across this portfolio include apartments, condos, townhomes, and seniors’ residences. The SmartVMC city centre development, the REIT’s flagship properties, is just one of five Transit City condominiums closing in the fall.

Lastly, the intensification program under the SmartLiving (rental apartments, condos, seniors’ residences, and hotels) and SmartCentres banners (retail, office, and storage facilities) are worth mentioning. The REIT aims to reshape Canada’s urban and urban-suburban landscape.

Dependable income stocks

Slate Grocery, NorthWest Healthcare Properties, and SmartCentres are dependable passive-income providers. You have an opportunity to increase your disposable income in the summer and beyond.

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. The Motley Fool owns shares of and recommends Costco Wholesale. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS and Smart REIT.

More on Dividend Stocks

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

Payday ringed on a calendar
Dividend Stocks

Canadian Dividend Investors: 2 ETFs That Pay Monthly Income With High Yields

Dividend ETFs often pay out monthly distributions compared to dividend stocks.

Read more »

think thought consider
Dividend Stocks

2 Stocks I Own and Will Buy More of if They Fall

Stocks tend to go up in the long run. Therefore, buying a basket of diversified stocks on dips should lead…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

Blue-chip dividend stocks such as Royal Bank of Canada and Manulife Financial pay investors a tasty forward yield.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: 3 Solid Stocks to Earn $355 Every Month

Looking to earn steady passive income? Here are three solid TSX stocks that can help you earn a worry-free passive…

Read more »

Dividend Stocks

RRSP Investors: 2 Stocks to Buy in August for Dividends and Capital Gains

RRSP investors can still find top TSX dividend stocks trading at cheap prices today for a buy-and-hold portfolio.

Read more »