Canadian investors who want to use stock market investing to create passive-income streams in their self-directed portfolios have plenty of good opportunities amid the market turmoil. Canadian real estate investment trusts (REITs) continue trading at significant discounts from their 2023 highs.
As an income-oriented investor, buying top-notch real estate stocks at discounted prices means you can enjoy payouts at inflated yields.
With strong earnings, high occupancy rates, and growing distributable cash flows, some of the top Canadian REITs warrant being on your radar if not already in your portfolio for this purpose. Today, I will discuss three of the biggest names in this space.
Allied Properties REIT
Allied Properties REIT (TSX: AP.UN) is a $2.69 billion market capitalization trust that sets itself as a leading owner-operator of urban workspaces across major Canadian cities. Most of its properties are in prime locations in Toronto and Montreal. Allied Properties REIT generates almost its entire revenue through rental income from tenants from various sectors, including banking, government, and telcos.
As of this writing, it trades for $21.06 per share, down by 31.04% from its February 3, 2023 high. The second quarter of fiscal 2023 saw it report a 4.1% year-over-year revenue growth. Its net income increased by 26% in the same period. At current levels, it pays its investors at an 8.46% annualized dividend yield, distributing $0.15 per share per month.
Canadian Apartment Properties REIT
Canadian Apartment Properties REIT (TSX: CAR.UN) is an $8.23 billion market capitalization REIT primarily engaging in the acquisition and leasing of multiunit residential properties near major urban centres across the country. Deriving most of its revenue through rental income from apartments and properties, CAPREIT’s holdings cater to the mid-tier and luxury market segments.
Canada’s largest residential REIT has benefited from the shift toward renting over buying due to high real estate prices nationwide. While it does not solve the housing crisis, renting offers relatively easier access to housing. As of this writing, its shares trade for $49.14, down by 7% from its July 2023 high. It pays its investors at a 3.07% annualized dividend yield, distributing $0.12 per month.
Killam Apartment REIT
Killam Apartment REIT (TSX: KMP.UN) is a $2.15 billion market capitalization REIT specializing in acquiring, managing, and developing multi-residential apartment buildings and Manufactured Home Communities (MHCs).
Besides its apartment and MHC segments, it also has a commercial segment with more than seven commercial properties under its belt. The housing affordability crisis also benefits Killam Apartment REIT.
As of this writing, shares of the trust trade for $18.27. At current levels, it pays its investors a 3.84% annualized dividend yield. It pays out $0.05833 per share in monthly distributions.
Its first quarter for fiscal 2023 saw its revenue and net operating income increase by 9.6% and 12.3%, respectively, year over year. With the robust demand for rental housing to persist, it looks well positioned to continue delivering good returns to its investors.
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Foolish takeaway
Buying when prices are low and selling when they soar is an excellent way to get good returns on your investment in the stock market. That said, investing in equity securities that pay monthly distributions to investors lets you enjoy monthly cash flows on top of potential capital gains.
To this end, REITs like Allied Properties REIT, Canadian Apartment REIT, and Killam Apartment REIT can be great additions to your self-directed portfolio.
