If you’re looking for passive income, it’s likely that you’re already considering real estate investment trusts (REITs). It’s clear why, as REITs pay out 90% of taxable income to shareholders, usually in the form of dividends. And many offer up monthly passive income as well!
But there’s more to consider beyond simply investing in the highest dividend. Instead, you want to find REITs that provide returns and a strong long-term outlook. So, let’s look at two sectors and two corresponding REITs that should continue to do well from April 2024 on.
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Industrial REITs
Some of the strongest REITs to consider right now are those in the industrial sector. These companies own and operate warehouses, distribution centres, and other industrial properties. With the rise of e-commerce and logistics, these industrial properties have been in high demand. And that has continued on for years, even during this post-pandemic age.
If you’re looking to consider a solid industrial REIT in this case, I would certainly consider Dream Industrial REIT (TSX: DIR.UN). This REIT focuses on industrial properties but is also part of the larger Dream network. The company owns, manages, and acquires industrial properties across Canada and the United States, creating a diverse range of industrial properties.
The tenant base is a strong mix of national and international tenants across various industries. These include everything from e-commerce to manufacturing, providing a solid mix of revenue streams as well. This has allowed the company to maintain a stable rent repayment and occupancy rate.
Yet the company still looks valuable with shares at $13, lower than 52-week highs of $15.13 as of writing. It trades at a reasonable 36.25 times earnings as well, while offering a 5.5% dividend yield as of writing. Altogether, you can look forward to a share price that continues to rise, currently up 13% since 52-week lows, while collecting a significant dividend.
Tech REITs
Yes, you can get into tech REITs, and I certainly would! These REITs are growing to support the tech sector and growing far beyond e-commerce industrial properties. These include REITs that focus on data centres and other technology-related properties. And these are quite valuable, given the rise in need for artificial intelligence support and faster internet speeds.
One company that is slowly but surely edging into this area is Hut 8 (TSX: HUT). True, HUT stock is well known for another reason, and that’s for its mining into cryptocurrency. However, the company has been buying up data centres, mainly in areas that offer better climates. I mean that literally. Data centres in areas such as Nova Scotia mean you can cool down the centres far easier than ones in the middle of a city.
The company now has a total of 11 data centres spread across British Columbia, Alberta, Ontario and Nova Scotia. The focus will be to leverage Canada’s renewable energy sources like hydro and nuclear power to run these data centres efficiently. Furthermore, these properties allow the company to rent space and power for its customers, while also offering public and private cloud solutions for data storage.
While this is certainly a newer area of REIT investment, it’s going to be a needed one. And HUT stock looks like it will be a huge beneficiary of growth in this area.
