2 Top REITs You Can Buy and Hold Forever

These two top REITs are among the best options for long-term, buy-and-hold investors in this current uncertain market.

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

Image source: Getty Images

Over the past three years, the real estate industry has seen impressive earnings growth of 27% annually. However, real estate investment trusts (REITs) have only grown their revenue, on average, by 7.6% per year. This indicates that many of these REITs are more efficient and have been compensating investors accordingly.

That said, not all REITs are created equally. There’s plenty of variation across trusts, from a sector perspective, geographic orientation, and risk profile. In my view, industrial and residential real estate are the sub-sectors to be in, with a focus on urban metropolitan areas.

Here are two such REITs that fit into these categories, that I would put into the “buy-and-hold-forever” bucket.

Dream Industrial REIT 

Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) has been a top pick of mine for quite some time. This trust focuses on high-quality industrial properties (warehouses and distribution centres) located near major metropolitan city centres. Thus, as the e-commerce boom continues, the demand for warehouse space in close proximity to buyers will continue to drive prices higher.

This REIT has been on a downtrend since early 2021, mostly due to rising interest rates. However, with the Bank of Canada signaling that rate hikes will be paused from here, REITs are starting to catch a bid. This is one such trust I think is worthy of keeping an eye on as a rebound candidate.

Additionally, fund manager GIC and Dream Industrial REIT purchased Summit Industrial Income REIT in an all-cash deal. Through a special distribution and redemption of units, Summit unitholders will receive a cash payment of $23.50 per unit. A limited partnership with an ownership structure consists of 90% for GIC and 10% for DIR.

The REIT boasts the highest dividend yield in its peer group (over 5%) and trades at around $13, which is quite cheap compared to its peers as well.

Canadian Apartment REIT

Canadian Apartment REIT (TSX:CAR.UN) released its most recent quarterly earnings report on Nov. 8. This report missed expectations, with earnings per share (EPS) coming in at 36 cents for the quarter (expectations were for EPS of 62 cents). Revenue of $252 million also did not excite investors.

That said, this REIT has among the highest-quality portfolio of residential properties in the market. The trust’s management team is also among the best in the business, growing in unique ways relative to its peers.

The REIT’s monthly dividend distribution of 12.1 cents per share is notable, as it provides investors with a regular monthly income stream. For those heading into retirement, such an income stream may be welcome, to help offset expenses. Indeed, while 3% isn’t anything to write home about, CAPREIT has raised its distribution consistently over its history.

Analysts at Raymond James released their predictions for CAPREIT stock’s EPS for the first quarter of 2024. For the quarter, Raymond James anticipates that the business will report $0.59 per share earnings. Analysts also provided forecasts for CAPREIT’s Q2 2024, Q3 2024, and Q4 2024 earnings to be pegged at $0.66, $0.67, and $0.63, respectively. These numbers suggest stable earnings over the coming year — something investors ought to like in this uncertain environment.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Dream Industrial Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Investing

edit Jars of marijuana
Cannabis Stocks

Is Tilray Stock a Buy in the New Bullish Market?

Canadian cannabis producer Tilray has underperformed the broader markets in the last five years due to its weak fundamentals.

Read more »

Woman has an idea

3 No-Brainer Stocks to Buy With $200 Right Now

These three stocks are no-brainer buys, given their solid underlying businesses and healthy growth prospects.

Read more »


2 Stocks I’m Loading Up on in 2024

Alimentation Couche-Tard (TSX:ATD) and another stock that are getting too cheap after their latest corrections.

Read more »

grow money, wealth build
Dividend Stocks

1 Top Dividend Stock That Can Handle Any Kind of Market (Even Corrections)

While most dividend aristocrats can maintain their payouts during weak markets, very few can maintain a healthy valuation or bounce…

Read more »

Red siren flashing
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

Three established dividend-payers from different sectors are compelling investment opportunities for income-focused investors.

Read more »

online shopping
Tech Stocks

1 Hidden Catalyst That Could Ignite Shopify Stock

Here's why Shopify (TSX:SHOP) ought to remain a top growth stock investors continue to focus on for the long haul.

Read more »

Oil pumps against sunset
Energy Stocks

Is it Too Late to Buy Enbridge Stock?

Besides its juicy and sustainable dividends, Enbridge’s improving long-term growth prospects make it a reliable stock to hold for the…

Read more »

Man considering whether to sell or buy
Tech Stocks

WELL Stock: Buy, Sell, or Hold?

WELL stock has a lot of upside as the company is likely to continue to grow, posting positive earnings in…

Read more »