Passive income continues to be one of the biggest areas of investment for Canadian investors. We’ve edged away mainly from those crazy growth stocks. Now, investors are either putting their cash into Big Tech or passive-income stocks.
Well, now is a great time to consider real estate investment trusts (REIT) for both! You can get high income from dividends and growth as we see a recovery. But of all the ones to consider, Minto Apartment REIT (TSX: MI.UN) is a solid option.
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A growing market
Housing prices have been insane. Because of this, apartments have become more popular out of necessity. And that’s unlikely to go away. In fact, this is something that’s already standard in European countries, which is why it looks like apartment REITs could be a strong opportunity.
Minto REIT is a great way to get into this area right now. The company offers multi-residential rental properties, mainly in urban centres across Canada. What’s more, there is a wide range of property types. Whether it’s high-rise apartment buildings, garden-style apartment buildings, or townhomes, the company offers it all.
And with more interest and stable cash flow, Minto REIT has been improving its position again and again. While it still maintains a diverse range of apartment types across the country, it’s sold a few to make sure its bottom line is strong. Therefore, you don’t have to worry about dividend cuts, at least for now.
Growing and growing
Granted, Minto REIT hasn’t been immune to the ongoing downturns. Shares dropped quite a lot after 2021, when the market sunk. It just so happened, of course, that this came right around the time of higher interest rates and inflation.
Yet after shares have come down, it now looks quite valuable ahead of this next year. While it’s unlikely to be in the first half of 2024, the second half should see interest rates come down. When that happens, the market will likely respond strongly to companies like Minto.
And Minto in particular. While other REITs are down, Minto REIT is up 5% in the last year. It now trades at just 0.59 times book value, putting it well within value territory as well.
Getting that income
The passive-income stock is a great option, and it’s only been on the market for a few years! Shares may be down since coming on the market. But you’re now getting a deal as we see a turnaround. Shares are up 42% since bottoming out a few years back.
Let’s say we see shares rise another 42%, which still wouldn’t even be all-time highs. If you were to invest $5,000, here is what that could turn into in the next year.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| MI.UN – now | $17 | 294 | $0.51 | $149.94 | monthly | $5,000 |
| MI.UN – highs | $24 | 294 | $0.51 | $149.94 | monthly | $7,056 |
As you can see, you could bring in $2,056 in returns and $149.94 in dividends. That’s total passive income of $2,205.94! On a monthly basis, that would turn into $183.83 in monthly passive income.
