Become a “Lazy Landlord” With These 3 Dividend Stocks

Dividend stocks are some of the best ways to create passive income, and that’s including becoming a landlord. There seems to be an issue with knowing what passive income actually is to begin with. Passive income is cash you’re making while doing absolutely nothing: sleeping, eating, memeing — you name it. You’re making cash.

That is not the case when you own a rental property. You’re constantly on call, have to maintain the property, and still need to pay down a mortgage in the meantime. It’s a lot of time and effort. So, just because you’re getting a fat cheque at the end of the month doesn’t mean you’re making passive income.

That’s why dividend stocks are a far better option. You can become a “lazy” landlord by investing in real estate stocks instead. In particular, I like these three real estate investment trusts (REITs).

Slate REIT

Slate Grocery REIT (TSX: SGR.UN) is the first option I would consider if you’re going to be a lazy landlord. Investing in a grocery chain would be an amazing way to make cash. People need to eat, and, therefore, investing in one of these properties could make you receive stable passive income.

But instead of investing in just one and all that goes with it, Slate REIT provides you with a diverse range of grocery-anchored properties in the United States. This last part is important, as in the U.S., there is a lot more competition, providing a lot more opportunity for growth.

Slate stock, however, is down 13% year to date, trading at just 6.96 times earnings as of writing. Interest rates and inflation seem to have investors believing the stock can’t perform as per usual. But the stock continues to see its free cash flow rise and now offers an 8.86% dividend yield. Here is what you could bring in annually from a $5,000 investment.

CAPREIT

Another strong contender, with shares actually up in 2023, is Canadian Apartment Properties REIT (TSX: CAR.UN). CAPREIT continues to do well as Canadians move towards renting over buying homes. And that market only looks like it’s going to continue climbing, with CAPREIT remaining one of the biggest apartment property owners in Canada.

The company has seen its free cash flow rise higher and higher since the slump of the pandemic, providing it with extra cash on hand in case it can make even more acquisitions. Shares are now up 19% year to date, with analysts expecting more growth to come this way as the year continues.

So, instead of buying one apartment to rent out and bringing that stress into your life, CAPREIT could certainly be a better option — especially as you can bring in a 2.92% dividend yield as well. Here is what a $5,000 would get you on the TSX today.

CT REIT

Finally, CT REIT (TSX: CRT.UN) is the last, but certainly not least, option here. Again, we’re looking at perhaps picking up a property to rent out to Canada’s darling, Canadian Tire, with 100 years on the books. But again, that’s not only stressful but pretty much impossible, given that CRT REIT is the property manager behind these buildings.

Let’s look at what would happen if you were to pick up this stock on the TSX today. You’d gain access to a company that simply doesn’t have supply-chain issues, thanks to warehouses on location. You’d also gain access to the largest auto mechanic service in Canada. Finally, you’ll get access to a diverse range of products beyond the Canadian Tire brand, which supports the REIT through a steady stream of income.

With long-term lease agreements, a long history of returns and dividend growth, and blue-chip status, this stock isn’t going anywhere. Investors can grab it for 13.67 times earnings with a dividend yield of 6.04%, receiving income each and every month. Here’s what that $5,000 would get you.