The Best Real Estate Dividend Stocks for Years of Passive Income

Are you looking to collect stable passive income for years? These two top TSX real estate stocks deliver value, growth, and income.

| More on:
a person looks out a window into a cityscape

Image source: Getty Images

Real estate stocks are a great place to earn regular passive dividend income. When buying a real estate stock, you get all the liquidity of a public stock but the benefits of owning private real estate. This includes predictable streams of leased income that is normally distributed to unitholders monthly.

Plenty of ways to collect passive income with REITs

The best vehicle for buying publicly traded real estate is through a real estate investment trust (REIT). REITs come in all sizes with different sectors and varying geographic exposures. Different REIT segments include industrial, multifamily/apartment, retail, office, healthcare, seniors care, mobile homes, and even hotels.

Now, not all REITs are created equal. If you want a REIT to buy and hold for years of reliable passive income, it needs to have a strong balance sheet, great assets in good locations, smart managers, and opportunities to steadily grow its cash flows on a per-unit basis. If you are looking for some real estate stocks that meet these criteria, here are two that look attractive today.

Granite REIT: As solid as it gets for passive income

Just like its name, Granite REIT (TSX:GRT.UN) is a solid Canadian stock to hold for years of passive income. With a market cap of $5.5 billion, it is currently the largest industrial real estate stock in Canada. It operates nearly 59 million square feet of industrial space across Canada, the U.S., and Europe. It has another five million square feet of space being developed.

Granite’s average lease is over 5.7 years, which means it has a foreseeable sightline of leased cash flows. With 99% occupancy, demand for its properties continues to be strong. The best part is that Granite has an industry-leading balance sheet. With a debt-to-asset ratio of 30%, its debt is well managed, long dated, and relatively hedged to rising interest rates.

Granite stock yields 4% right now. Its payout ratio is only 78%, which means its distribution is sustainable. It has increased its dividend annually for 12 consecutive years, so it is a great bet for rising monthly passive income. It helps that this stock is trading at a near 15% discount to its assessed private value.

BSR: Undervalued, high-quality multi-family real estate

BSR REIT (TSX:HOM.U) is another stock to consider for exposure to multifamily real estate in the United States. With interest rates rising, home ownership has become much more costly. That makes BSR’s garden-style communities very attractive for young professionals and families.

Its properties are in top U.S. growth markets like Oklahoma City, Dallas, Houston, and Austin. With strong immigration and high demand, BSR has seen its occupancy rise to over 96%.

BSR has a solid balance sheet with a low 36% debt ratio. Today, 100% of its debt is fixed and it has $176 million of liquidity. Despite its high-quality portfolio, this REIT trades at a 35% discount to its net asset value (private market value).  

Today, this real estate stock earns a 3.75% distribution yield. It raised its distribution last year by 4%. Given its low distribution payout ratio, another increase could be possible in 2023.

Insiders have a large stake in the REIT, so their interests to succeed are aligned with unitholders. If you are looking for value, income, and even growth, BSR is a great long-term stock to hold for passive income.  

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 Robin Brown has positions in BSR Real Estate Investment Trust and Granite Real Estate Investment Trust. The Motley Fool recommends BSR Real Estate Investment Trust and Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Dividend Stocks

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How Much Cash Do You Need to Quit Work and Live Off Dividend Income

Toronto-Dominion Bank (TSX:TD) pays a lot of dividend income. Can you live off of it in retirement?

Read more »

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,398.40 in Passive Income 

This dividend stock offers a whopping 11.9% dividend yield right now, with returns that should fly high for this cyclical…

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

This 6.1 Percent Dividend Stock Is My Pick for Instant Income

Here’s what makes Transcontinental one of my top dividend stock picks right now for instant income.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

For a Shot at $5,000/Year in Passive Income, Buy 1,000 Shares of This TSX Stock

Do you know you can build passive income with TSX stocks? A $22,000 investment can give you a shot at…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

A new Canoe EIT Income Fund (TSX:EIT.UN) investment could earn almost 9% yield annually, and the monthly dividend stock has…

Read more »

RRSP (Registered Retirement Savings Plan) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

RRSP Wealth: 2 Great Dividend Stocks to Own for Total Returns

Dividend stocks like Fortis Inc (TSX:FTS) can be great additions to a well-diversified portfolio.

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Cheap Stocks to Add to Your TFSA Before They Get Expensive

The stock market has some lucrative TFSA stocks trading at multi-year lows. Now is a good time to buy these…

Read more »

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

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $10,000

Here’s how to build a diversified portfolio with dividend stocks that, as a group, pay out in every month of…

Read more »