Got $10,000 to Invest? How to Turn it Into Monthly Income

Canadians can produce recurring monthly income streams from a $10,000 investment in two high-yield real estate stocks.

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In today’s inflationary environment, real estate investment trusts (REITs) are useful investment options to boost your regular income. Besides the juicy dividends, most Canadian REITs pay monthly dividends.

A $10,000 investment can turn into monthly income similar to rental income from direct ownership in investment properties. You can receive more than $50 monthly by investing in H&R (TSX:HR.UN) and Primaris (TSX:PMZ.UN). Their dividend yields are more than 6%.

Simplified business model

H&R is one of Canada’s largest landlords. The $2.6 billion REIT made a strategic move in 2021 and is making another one this year. In December 2021, the shareholders voted to spin off H&R’s entire enclosed mall portfolio and concentrate on multi-residential and industrial properties.

The result is Primaris, which is now Canada’s only enclosed shopping centre-focused REIT. Management said the move was a transformational strategic repositioning plan to simplify the business model and create significant value and growth for unitholders.

On February 20, 2024, H&R announced the creation of Lantower Residential Real Estate Development Trust, a real estate development trust (REDT). The plan is to sell REDT units through an initial public offering (IPO) and raise $52 million. Lantower Residential is H&R’s subsidiary, and REDT is a partnership on two residential development projects in Florida.

H&R’s executive chairman and chief executive officer, Thomas J. Hofstedter, said. “The creation of the REDT is expected to maximize value both for H&R REIT and the REDT. This strategic initiative positions H&R’s development pipeline well for the future.”  He added that REDT, as a new capital source, will enhance financial capacity and enable H&R to acquire it eventually.

In 2023, rental from investment properties and net operating income (NOI) rose 1.5% and 2.2% year over year to $847.1 million and $546.6 million. At year-end, the occupancy rate was 96.5% compared to 93.7% in mid-year 2021. Rental growth was highest in the residential (18.7%) and industrial (12.5%) property portfolios.

Hofstedter noted the substantial progress of H&R’s strategic plan over the last 30 months. The REIT displayed resiliency amid a challenging economic environment and volatile capital and real estate markets. The transformation into a simplified growth-oriented company is almost complete. This real estate stock trades at $9.35 per share and pays a 6.45% dividend.

Significant runway for growth

Primaris went public on January 5, 2022, or the year when inflation rose and peaked at 8.3% in June. The inflation reading in January 2024 is down to 2.9%. If you invest today, the share price is $13.72, while the dividend offer is 6.12%. This $1.32 billion REIT impressed investors with its full-year 2023 results.

In the 12 months ending December 31, 2023, rental revenue and cash NOI increased 14% and 17.7% to $113.8 million and $56.5 million versus 2022. The investment properties increased from 35 to 39, while committed occupancy was 94.2%.

Its president and chief operating officer, Patrick Sullivan, said that given the good business performance, there’s a significant runway for internal growth in the coming years. He added that Primaris enjoys several competitive advantages, including partnerships with retailers on multiple location leasing deals.

Strategic initiatives

H&R’s spin-off of its retail properties resulted in a simplified business model. It also produced a REIT to capitalize on a recovering industry and growing mid-sized, high-growth markets.   

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Primaris Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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