Today, there are a number of Canadian real estate investment trusts, or REITs, that are providing investors with attractive yields. The trick is knowing which ones are suitable in terms of quality and risk. In this article, I’ll discuss three top Canadian REITs that have both high yields and reasonable risk profiles.
Without further ado, here they are.
Chartwell Retirement Residences REIT
With more than 20 years in operation, Chartwell Retirement Residences (TSX:CSH.UN) has a strong history of shareholder returns and customer satisfaction.
Chartwell is Canada’s largest provider and owner of seniors housing communities, from independent living to long-term care. The goal is simple: making people’s lives better and “to provide a happier, healthier, and more fulfilling life experience for its residents.”
While the REIT was hit back in 2020 when the pandemic hit, this was just a blip in an otherwise strong business. In fact, occupancy rates are continuing to recover as Chartwell benefits from one of the strongest trends today: the aging population. In September 2023, occupancy was 82.1%. It rose 100 basis points in October to 83.1% and another 110 basis points in November to 84.2%. It ended the year at 84.9%.
Chartwell is currently yielding a very strong 4.97%. And this dividend is something we can count on, as evidenced by the fact that it’s a Dividend Aristocrat with a 20-year history of dividend payments.
Granite REIT
As a REIT that focuses on logistics, warehouse, and industrial properties, Granite Real Estate Investment Trust (TSX:GRT.UN) is primed to continue to benefit from the new e-commerce world. It has 137 income-producing properties globally, with six in development. Its global footprint includes properties in “safe” regions such as North America, Germany, and Austria.
Granite REIT’s historical operating results are strong, with revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) more than doubling since 2017. The REIT currently boasts a 95% occupancy rate, with a weighted average lease term of 6.2 years. It’s currently yielding 4.37%. Finally, Granite has a history of 13 consecutive annual dividend increases, and its leverage is comparatively low, with a debt-to-total capitalization ratio of 37%.
I consider Granite a top Canadian REIT due to its strong financial standing, its consistently strong operating results, its dividend history, and its focus on attracting quality tenants in its growing business.
Dream Industrial REIT
As another REIT involved in the fast-growing industrial space, Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) is benefitting from the same forces that Granite is benefitting from. That is, industrial properties that stand to benefit from the growth in e-commerce.
Dream REIT is yielding 5.52% at this time. 2023 results were strong, with a 10.1% growth rate in funds flow from operations and an 11.3% increase in net operating income. This was backed by a strong occupancy of 96.2%.
Similar to Granite, Dream REIT has a strong balance sheet that will help it execute its growth plans. Its debt-to-total capitalization stands at 38%, and it has $492 million in available liquidity. This goes a long way in reducing the risk profile of the REIT. Finally, market rents are growing, and this will support strong organic growth for Dream. This further reduces the risk inherent in this investment.
The bottom line
So, there you have it: these three top REITS that will likely provide steady, predictable income for years to come.
