Passive-Income Power: Earn $99/Week TAX FREE With 3 Top REITs

Investors looking to generate big passive income should target Northwest Healthcare REIT (TSX:NWH.UN) and others in April.

Ambrose O'Callaghan

Ambrose O'Callaghan graduated with a BA in Political Science from McMaster University. After that, he jumped into the banking world. He worked from the front line to an investment associate role. After that, he found a way to marry his experience and knowledge in the world of banking and finance to his love and passion for writing. Ambrose is a passionate believer in Warren Buffett's value investing model.

Published April 17, 2022 11:00 am EDT

Passive income is money earned from very little or no active labour on the part of the investor. The establishment of a strong passive income is a major milestone. Today, I want to discuss how investors can achieve that goal with the aid of real estate investment trusts (REITs). These are fantastic sources of income in this market. Moreover, I want to target these REITs in a Tax-Free Savings Account (TFSA), which will allow us to generate tax-free income going forward. Let’s jump in.

This healthcare REIT offers defence and big dividends

Northwest Healthcare REIT (TSX:NWH.UN) is a Toronto-based REIT that offers investors exposure to healthcare real estate around the world. Its shares have increased 1.1% in 2022 as of late-morning trading on April 13. The stock is up 5.6% in the year-over-year period.

This REIT proved to be a top defensive option for investors during the COVID-19 pandemic. Indeed, investors should bet on increased activity at healthcare facilities going forward. This will be bolstered by aging populations across the developed world.

Shares of this REIT were trading at $13.82 in mid-morning trading today. In our hypothetical, we’ll snatch up 1,965 shares for a total purchase price of $27,156.30. Northwest Healthcare currently offers a monthly distribution of $0.067 per share, representing a 5.7% yield. This will allow us to generate weekly passive income of $30.38 in our TFSA going forward.

Passive-income investors should look to target True North today

True North REIT (TSX: TNT.UN) is another REIT that operates a portfolio of office properties across Canada. This stock has dropped 6.1% in the year-to-date period. That has pushed the REIT into negative territory from the prior year.

In 2021, True North saw its same property net operating income (NOI) rise to $88.4 million compared to $87.9 million in the prior year. Meanwhile, adjusted funds from operations (AFFO) remained flat in the year-over-year period.

This REIT was trading at $6.97 per share at the time of this writing. In this scenario, we’ll look to snag 3,900 shares of True North REIT for a purchase price of $27,183. True North last paid out a monthly distribution of $0.05 per share. That represents a monster 8.5% yield. This investment will allow investors to generate tax-free passive income of $45 on a weekly basis.

One more REIT that can complete your passive-income portfolio

American Hotel REIT (TSX: HOT.UN) is the last REIT I’d look to target to build a passive-income portfolio. Investors may want to target this space, as travel demand and tourism is on the rise after two pandemic-ridden years. Shares of this REIT have climbed 1.5% in 2022.

The American Hotel REIT was trading at $3.85 per share in mid-morning trading on April 13. For our final purchase, we’ll pick up 7,050 shares for a total purchase price of $27,142.50. This REIT last paid out a monthly dividend of $0.015 per share. That represents a strong 5.8% yield. We can now count on weekly passive income of $24.42 going forward.