The Top 3 Industrial REITs to Ride the E-Commerce Boom

Income seekers should include the top three REITs in their stock portfolios. Dream Industrial stock, Summit Industrial stock, and WPT Industrial stock benefit from e-commerce and should provide consistent dividend payments for years.

| More on:
edit Real Estate Investment Trust REIT on double exsposure business background.

Image source: Getty Images

The e-commerce boom is why industrial properties were hot items, even before coronavirus. Real estate investment trusts (REITs), particularly those in the industrial sector, became glamorous investment options in the pandemic. Landlords leasing out industrial real estate help facilitate commerce and trade amid the health crisis.

Dream Industrial (TSX:DIR.UN), Summit Industrial (TSX:SMU.UN), and WPT Industrial (TSX:WIR.U) benefit from the new reality. They are the top three REITs Canadians should include in their stock portfolios. Rental income is recurring, and so are dividend payments to investors or pseudo-landlords.

Dream investment

Dream Industrial is indeed a dream investment for income seekers. At $16.23 per share, the dividend yield is 4.31%. This $3.41 billion REIT has built a strong leasing momentum in 2021. In Q2 2021, net rental income rose 20.57% to $51 million versus Q2 2020.

In the first six months of 2021, Dream reported a net rental income of $97.75 million or a 19.04% year-over-year increase. The portfolio growth was 27.22%, from 169 to 215 assets. Notably, the occupancy rate was 98% from 95.6% in the same period in 2020. Brian Pauls, Dream’s CEO, said, “We continue to take significant steps to create a more resilient, valuable, and growing business for our unitholders.”

Dream operates high-quality and well-diversified assets in the most sought-after logistics markets in North America and Europe. The REIT is also perfect for a long-term hold, given its pipeline for future acquisitions worth over $200 million.

Proven asset class

Summit Industrial owns and operates highly marketable light industrial properties. The $3.37 billion REIT generates solid returns because of lower market rent volatility and lower operating costs. More importantly, the high-value generic-use space of its properties attracts a diverse group of tenants.

Paul Dykeman, Summit’s CEO, said about the most recent quarterly results, “Our track record of strong growth and operating performance continued through Q2 2021.” The REIT reported a $79.9 million net rental income in the first half of the year, or a 16.8% increase compared to the same period in 2020.

Summit’s operating performance is strong because the leasing program is proactive. The occupancy rate is almost constant at 98.8%. As of August 10, 2021, the share price is $20.10, while the dividend yield is 2.81%.

Target acquisition

WPT Industrial is under a different circumstance following the arrangement agreement entered with Blackstone. U.S.-based Blackstone, one of the world’s most active investors in logistics real estate, will acquire all of the outstanding units of the $1.81 billion Canadian REIT.

The transaction is proof of the high-quality portfolio that WPT has built in the industrial real estate sector. WPT’s portfolio includes 110 distribution and logistics properties in the top-tier industrial markets in 20 U.S. states. The acquisition will enable Blackstone to expand its logistics presence.

WPT trades at $21.82 per share, while the dividend yield is 3.48%. The target date for the completion of the Blackstone transaction is on November 15, 2021.

Great income stocks

Industrial REITs are great income stocks. They give regular investors exposure to the real estate sector without owning physical properties. You can also trade the REITs as you would stocks. But the best part is that the top three REITs will consistently pay dividends. The payouts should be safe, given the significant demand for industrial properties and longer lease terms.

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 recommends DREAM INDUSTRIAL REIT and SUMMIT INDUSTRIAL INCOME REIT.

More on Dividend Stocks

Gas pipelines
Dividend Stocks

3 Stocks for High-Yield Income Each Month

Are you seeking passive income? Consider investing in these high-yield TSX dividend stocks now.

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

2 Dividend Stocks for Beginner Investors in March 2023

Are you a new investor looking for great dividend stocks to buy? Here are two top picks!

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Need $500 in Passive Income Each Month? These 2 TSX Stocks Are Your Top Bets

You can create a robust monthly dividend income portfolio around SmartCentres REIT, and another top passive income play today.

Read more »

A worker gives a business presentation.
Dividend Stocks

2 TSX Dividend Stocks to Buy Today and Hold for the Next 5 Years

These TSX industry leaders look cheap today and pay attractive dividends that should continue to grow.

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

3 Dividend Stocks to Buy Before the End of March

These dividend stocks all have earnings coming up that could see share prices rise higher, so get in on a…

Read more »

grow dividends
Dividend Stocks

5 Canadian Dividend Stocks With Yields of 5% or More

Here are five of the best dividend stocks Canadian investors can buy to boost their passive income in the current…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Looking for $200/Month in Alternative Income? Buy 2,000 Shares of This Stock

Here’s a renewable energy-focused monthly dividend stock you can buy now to create a reliable source of alternative income in…

Read more »

Dividend Stocks

Why I Continue Buying Shares of This Magnificent Dividend Stock Hand Over Fist

This glorious dividend stock is a buy in all market situations. It not only gives you market returns but also…

Read more »