Canadians who are actively employed could use a salary raise in 2024 to boost their disposable income and recover some financial breathing space. However, recent inflation bouts of 2022 haven’t been sparing, even for businesses. Many employees may not be that “lucky” on the compensation negotiation table. Regardless, one could still use savings from prior years to build a bulletproof passive income portfolio and receive an extra $100 per month – tax-free.
The good news for investors looking to boost regular income in 2024 is that yields on dividend stocks, bonds, Guaranteed Investment Certificates (GICs), and especially on Canadian Real Estate Investment Trusts (REITs) are generally higher than they were two years post their 2022 price drops. However, yields may start shrinking again if the Bank of Canada begins lowering benchmark interest rates to maintain a healthy economy next year.
Investors may enjoy capital gains as top Canadian REITs eventually recover. One REIT is of particular interest following its recent distribution increase, and given its low leverage, and a cheaply valued portfolio with strong occupancy rates that could sustain its dividend aristocrat status for longer.
Own industrial real estate through Granite REIT
Granite Real Estate Investment Trust (TSX:GRT.UN) is an industrial REIT that holds a portfolio of 137 income-producing properties with nearly 63 million square feet of gross leasable area (GLA) in Canada, the United States, and across Europe. It’s a landlord to automotive manufacturing giant Magna International, which comprises 25% of its gross annual rent.
Early investors in Granite REIT units received consistent monthly income distributions (since 2004). The trust has raised distributions for 13 consecutive years now, including a 3.1% increase to $0.2750 per unit announced in November, effective with the January 2024 payout.
A new investment in Granite REIT could potentially generate reliable passive income streams every month in 2024. The trust’s well covered distribution yields 4.3% annually.
The industrial property giant pays one of the safest distributions in the Canadian REIT space today. Granite REIT safely paid out 71% of its Adjusted Funds From Operations (AFFO) during the first nine months of 2023 – a significant improvement from 77% during the same period in 2022.
What’s more, the trust is increasingly more profitable going into 2024. New property developments and wide rent spreads on new leases helped Granite REIT to 16.2% growth in net operating income, a 7% increase in same property net operating income, and a 10% surge in AFFO per unit, year over year, during the third quarter of 2023.
Industrial properties remain in high demand as Europe and North America revive industrial bases, and decouple supply chains from China. Granite REIT’s portfolio retained a 95.6% occupancy rate going into October, and employs very low leverage with a debt ratio of 32%. Higher interest rates aren’t an immediate concern.
How to earn $100 per month in passive income
To generate an extra $100 per month or $1,200 per annum in passive income, one could buy 364 units in Granite REIT for about $27,600 at current prices. The table below summarizes the transaction.
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
| Granite REIT (TSX:GRT.UN) | $75.75 | 364 | $0.2750 | $100.10 | Monthly |
Take note that REIT distributions are generally taxable income. The investment can be located in a Tax-Free Savings Account (TFSA) to efficiently avoid future income and capital gains taxes forever.
Before investing, please consider diversifying your portfolio holdings to spread investment risks. Dividend stocks, REITs, and various suitable fixed-income products may help reduce some risks, and increase the likelihood of reaching your financial objectives.
