Macroeconomic uncertainties are continuing to keep the Canadian stock market highly volatile this year. As a result of these economic challenges, the TSX Composite benchmark tanked by 5.2% in May, posting its worst monthly performance of 2023 so far. In such a volatile market, it’s highly recommended that you hold some high dividend-paying real estate investment trusts (REITs) in your portfolio that can help you earn reliable passive income, even in a difficult economic environment.
In this article, I’ll highlight two of the best Canadian REITs with attractive dividend yields you can buy now to hold for years to come.
Allied Properties REIT stock
Allied Properties Real Estate Investment Trust (TSX: AP.UN) is a Toronto-headquartered REIT that owns a large portfolio of urban workspace in many of Canada’s large cities. It currently has a market cap of $2.9 billion, as its stock trades at $22.61 per share with 11% year-to-date losses. At this market price, Allied Properties offers a very attractive 8% annualized dividend yield and distributes dividend payouts every month.
Since its initial public offering nearly 20 years ago, Allied Properties REIT’s total assets have grown from just $128 million to $11.9 billion. During this timeframe, its net asset value per unit has also grown significantly.
In the five years between 2017 and 2022, Allied’s total revenue rose about 24% from $419.3 million to $519.5 million. Despite facing COVID-19-related challenges in between, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) jumped 59% during the same five-year period from $252.8 million to $403.1 million.
Besides these positive factors, Allied’s strong financial foundation and lower occupancy costs make it a trustworthy REIT to invest in for the long term, especially if you’re looking to earn monthly passive income.
Choice Properties REIT stock
Choice Properties Real Estate Investment Trust (TSX: CHP.UN) could be another fundamentally strong Canadian REIT to invest in for monthly passive income. It currently owns a large portfolio of 703 high-quality retail, industrial, and mixed-use and residential properties across Canada with a reliable tenant base.
After rallying by 17.2% in the final quarter of 2022, Choice’s share prices have seen a 9.5% value erosion this year so far to currently trade at $13.36 per share with a market cap of $4.4 billion. It offers a 5.6% annual dividend yield at the current market price.
Despite macroeconomic challenges, Choice Properties REIT delivered a strong financial performance last year with the help of consistent strength in its grocery-anchored and necessity-based retail portfolio. In addition, recent increases in rent for its generic industrial portfolio helped its EBITDA grow positively.
To give you an idea about its long-term financial growth trends, Choice’s total revenue in five years between 2017 and 2022 saw a solid 52% increase from $829.8 million to $1.3 billion. More importantly, its adjusted EBITDA inched up by 57% during the same timeframe from $598.3 million to $941.6 million.
As Choice Properties REIT continues to focus on its development pipeline, you can expect its financial growth trends to improve further in the coming years and help its share prices soar.
