Investing in real estate investment trusts (REITs) could be a great way for long-term investors to grow their wealth, especially those in Canada. In simple words, REITs own or finance income-producing real estate across various property sectors. Another key reason you may want to consider REITs for long-term investment is their potential for consistent income generation, making them really appealing for investors seeking regular passive income.
In fact, most top Canadian REITs provide monthly dividends, which can help investors, especially those who might need regular income, like retirees. In addition, investing in REITs allows individuals to gain exposure to real estate without getting into the complexities and capital requirements of directly owning properties.
In this article, I’ll highlight two of the best Canadian REITs you can buy in December 2023.
My first Canadian REIT pick for December 2023
Canadian Apartment Properties Real Estate Investment Trust (TSX:CAR.UN) is my first REIT stock pick for December 2023. This Toronto-headquartered REIT currently has a market cap of $7.7 billion as its stock trades at $46.23 per share with 8.3% year-to-date gains after rallying by more than 13% in November alone. At this market price, it offers a decent 3.2% annualized dividend yield and distributes its dividend payouts every month. More importantly, the REIT’s dividend per share has more than doubled since it went public nearly 26 years ago.
If you don’t know it already, Canadian Apartment Properties has decades of experience operating a large network of residential apartment suites and townhomes. Currently, the company owns nearly 65,500 properties in Canada and the Netherlands.
The underlying strength of its high-quality portfolio could be understood by the fact that despite economic uncertainties, Canadian Apartment’s revenue grew positively by 5.7% YoY (year over year) to $793.1 million In the first three quarters of 2023 combined. I expect its top-line growth trends to improve further in the coming years as the company continues focusing on new acquisitions under its portfolio modernization program, which should help the share prices trade positively.
My second Canadian REIT pick for December 2023
Allied Properties Real Estate Investment (TSX:AP.UN) is another top Canadian REIT stock you can consider buying in December. This open-ended REIT currently has a market cap of $2.3 billion, as its stock trades at $17.87 per share. Although the stock witnessed around 13% gains in November, it is still down more than 30% on a year-to-date basis, making it look even more attractive to buy on the dip for the long term. This REIT has a very attractive annualized dividend yield of 10.1% at the current market price.
Even as macroeconomic uncertainties have affected the demand for commercial real estate of late, the demand for Allied’s workspace across Canada remains largely stable. In the third quarter of this year, the company reported an improvement in its funds from operations to 59.8% per unit from 58.8% per unit a year ago.
Allied recently sold its UDC portfolio to increase its focus on distinctive urban workspace business in Canada and strengthen its balance sheet. These long-term initiatives could help the company deliver stronger financial growth in the coming years and help its share prices inch up.
