Investors seeking real estate presence in their portfolio turn to real estate investment trusts (REITs). Some real estate investors sidestep direct ownership and buy REITs because of a smaller cash outlay. If you want passive income fast, you can tap this asset class as your new source of funds.
However, yield-thirsty investors will likely take positions in Automotive Properties (TSX: APR.UN), BTB (TSX: BTB.UN), or Chartwell Retirement Residences. (TSX: CSH.UN) REITs. Besides the high yields, the payout frequency is monthly. These real estate stocks also trade below $12, so you can buy as many shares as possible to earn higher dividends per share.
CPI-adjusted rental growth
Automotive Properties’ classification is under office REIT, although it leans toward the specialty side due to its unique portfolio. This $563.6 million REIT owns income-producing automotive dealership properties in Canada’s urban centres. At $11.49 per share (-8.87% year-to-date), the dividend yield is a lucrative 6.94%.
Despite the high-interest rate era, the REIT delivered superb results to start the year. In Q1 2023, rental revenue and net operating income (NOI) increased 12% and 10.9% year over year to $22.8 million and $19.4 million, respectively. Its CEO, Milton Lamb, credits revenue and NOI growth to contractual rent increases and acquisitions during the quarter.
Lamb adds that Allied Properties is well-positioned to generate solid performance due to an expanded property portfolio that has embedded fixed and Consumer Price Index (CPI)-adjusted rental growth.
Positive prospects
BTB is absurdly cheap ($3.14 per share), considering its mouth-watering dividend yield (9.38%). This $271.6 million diversified REIT’s portfolio comprises industrial, core office (off-downtown), and necessity-based retail properties. Management’s acquisition strategy focuses on buildings and other properties in primary markets with redevelopment opportunities.
According to management, the leasing department is BTB’s epicentre of success. The most recent quarterly results indicate robust rental activity. In Q1 2023, rental revenue, NOI, and net income rose 13.2%, 17.1%, and 32.4% to $32.9 million, $19 million, and $8.8 million, respectively, versus Q1 2022.
BTB’s President and CEO, Michel Leonard, said future prospects are positive as the REIT pivots into the industrial property segment. At the quarter’s end, 23 (31.5%) of the total 74 properties are industrial. The target is 60% in-demand industrial properties by 2026.
Healthcare REIT
Chartwell is outperforming the TSX year to date (+10.51% versus +1.90%) despite a higher net loss in Q1 2023. At $9.07 per share, current investors enjoy a hefty 6.63% dividend. This $2.2 billion REIT is known for its senior housing solutions, including independent retirement or long-term care (LTC) residences and assisted living services.
In the three months that ended March 31, 2023, the net loss grew from $3.3 million in Q1 2022 to $9.2 million. However, resident revenue increased 5.2% year over year to $165.8 million. Regarding operating performance, the weighted average occupancy rose 1.4% to 78.5%.
Its CEO, Vlad Volodarski, firmly believes the healthcare REIT’s unique property portfolio and national management platform have significant embedded potential value. Chartwell’s goal is to become a more agile and scalable company.
Generous dividend-payers
The beauty of investing in REITs is that they improve portfolio diversification while providing regular income streams. Another salient feature is that you can choose individual REITs from seven real estate sub-sectors. Automotive Properties, BTB, and Chartwell stand out for their generosity.
