The current state of Canada’s real estate sector is unkind to sellers and buyers because of the inflationary environment. Home sellers complain of difficulty in landing a sale, while prospective buyers lament high mortgage costs and reduced purchasing power.
Fortunately, for stock market investors, selected real estate investment trusts (REITs) display staying power. Besides their attractive dividend yields and monthly payouts, four amazing Canadian REITs have solid fundamentals and can secure your future.
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Residential
Killam Apartment (TSX: KMP.UN) and Minto Apartment (TSX: MI.UN) enjoy 9.92% plus and 5.05% plus year-to-date gains due to higher demand for rental properties. Killam is one of Canada’s top residential landlords. It owns, operates, and manages apartments, manufactured homes, and seasonal properties. At $17.23 per share, the dividend offer is 4.06%.
The $2 billion growth-oriented REIT delivered strong quarterly financial performance recently. In the three months that ended September 30, 2023, Killam’s property revenue and net operating income (NOI) rose 5% and 6.6% to $89.5 million and $68.3 million, respectively.
Killam’s President and CEO, Philip Fraser, said the REIT is disposing of non-core assets to pay down variable rate debt and strengthen the portfolio and balance sheet. He adds the development program ensures robust top-line growth.
Minto is smaller than Killam and pays a decent 3.52% dividend ($14.35 per share). This $572.5 million REIT rents out apartments and furnished suites in vibrant cities. The target renters are students, newcomers, young professionals, and young families.
In Q3 2023, Minto’s revenue and NOI increased 5.3% and 6.6% respectively to $39.8 million and $25.8 million versus Q3 2022. The average monthly rent rose 7.2% year over year, while the average occupancy rate reached nearly 97%. Its President and CEO, Jonathan Li, said the 17% average gain on new leases was the highest quarterly level in Minto’s history.
Industrial
The demand for institutional quality real estate is ever-growing, and Granite (TSX: GRT.UN) generates stable cash flow from its property portfolio. This $4.4 billion REIT acquires, develops, owns, and manages logistics, warehouses and other industrial properties in North America and Europe. The current share price is $69.54, with a corresponding yield of 4.60%.
In the first nine months of 2023, revenue and NOI climbed 18.6% and 17% respectively to $391.4 million and $325.2% from a year ago. Management credits the completion of developments, expansions beginning in Q3 2022, contractual rent adjustments or consumer price index-based increases, and renewal leasing activity for the impressive NOI year-over-year growth.
Retail
Slate Grocery (TSX: SGR.UN) trades at a discount at the current share price of $10.40 (-25.7% year to date). You can also partake in the mouth-watering 8.4% dividend yield. The underperformance is misleading because this real estate stock is recession-resistant. This $615 million REIT owns and operates grocery-anchored real estate (100%) in the United States.
Its CEO, Blair Welch, said, “We believe we have significant growth still embedded in our portfolio, with in-place rents that are well below market.” Welch adds the strong fundamentals in the grocery-anchored sector provide tailwinds and durable cash flows.
Passive income streams
Killam, Minto, Granite, and Slate Grocery belong to the more stable sub-sector of the real estate industry. The portfolio of each REIT has distinct qualities and strengths. All can provide reliable passive income streams today and in the long run.
