Be a Lazy Landlord: 2 REIT Stocks With Regular Income

Two established REIT stocks are reliable sources of regular income for lazy landlords.

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

Image source: Getty Images

Real estate investment trusts (REITs) are the next-best alternatives if the prices of investment properties are sky high, like they are today. However, REITs are also the best options for Canadians who want to be lazy landlords. Apart from the lower cash outlay, you can earn regular income like actual rental property owners.

Crombie (TSX:CRR.UN) and Canadian Apartment Properties (TSX:CAR.UN) are established REITs with consistent dividend payouts. Would-be investors gain access to the real estate sector minus the headaches and costs that come with rental property ownership.

Strong backer

Food retailer Empire Company has a 41.5% ownership stake in Crombie. This $3.06 billion REIT has been in existence for 57 years and currently has 298 properties under management. Because the portfolio consists of high-quality grocery-anchored properties, cash flow growth is predictable.

Crombie derives 82% of annual minimum rent (AMR) from grocery and pharmacy-anchored properties. Sobeys, Empire’s subsidiary, is the REIT’s strategic partner. Also, 80% of the top 10 tenants have investment-grade credit ratings. In Q3 2021, the committed occupancy was 96.5%, while rent collection was 99%.

Apart from the retail and commercial properties. Crombie has office and retail-related industrial properties for lease. As of October 2021, the percentage of rent collection is 100%. Moreover, 70% of AMR comes from tenants in VECTOM providing essential services. VECTOM refers to the Vancouver, Edmonton, Calgary, Toronto, Ottawa, and Montreal markets.

The compelling reasons to invest in Crombie are its strong, stable high-quality properties and low-risk property portfolio. Notably, Empire is the anchor tenant in 85% of the retail properties. The weighted average remaining lease term of Empire is 12.7 years.

More value creation is on the horizon, given the major development pipeline in VECTOM and pipeline properties with zoning approval. Crombie expects to complete six development projects in the near term and 24 mixed-use properties in the medium and long term.    

Performance-wise, Crombie outperformed the TSX in 2021 (+36.71% versus +21.74%). At $18.62 per share, the dividend offer is a 4.81%. Assuming you invest $50,000, the regular income per month is $200.42.

Growth-oriented landlord

Canadian Apartment Properties, or CAPREIT, owns or has interests in residential apartment suites, townhomes, and land lease community sites in Canada, Ireland, and the Netherlands. In Q3 2021, this $10.38 billion, fully internalized, growth-oriented REIT reported 6.4% and 6.7% growth, respectively, in operating revenues and NOI versus Q3 2020.

CAPREIT has yet to present in Q4 2021 results. However, its president and CEO Mark Kenney said, “We continued to generate solid growth and strong operating performance in the third quarter, indicating another record year for CAPREIT in 2021.”

After three quarters in 2021, CAPREIT had $138 million in cash and $243 million in unutilized credit lines. Kenney added the unencumbered Canadian properties worth $1.2 billion can provide additional capacity if CAPREIT needs to fund its growth. Because of positive value drivers, management is confident that the REIT will generate strong and growing returns to unitholders in the long term.

The real estate stock’s total return in 2021 was 22.97%. If you invest today, the share price is $59.96, while the dividend yield is a decent 2.42%.

Rental-like income

Canada’s housing market is red hot but riddled with uncertainty. Hence, established REITs like Crombie and CAPREIT are viable investment options if you need rental-like income in 2022.

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 has no position in any of the stocks mentioned.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »