3 REITs to Buy Hand Over Fist in May

REITs are great options to for income-seeking investors. Here’s a trio for investors to buy hand over fist this month.

Demetris Afxentiou

Author Bio Demetris has a professional background in business and technology and has been writing about Canadian markets and personal finance for The Motley Fool Canada for more than a decade. His investing journey has evolved from mutual funds and precious metals to individual stocks, cryptocurrency, and long-term wealth-building strategies. Over the years, his interest in the market led him to discover what he calls “everyday stocks”: quality businesses that people interact with regularly but may not realize they can invest in and potentially earn income from. Demetris focuses on helping investors understand the businesses behind the stocks they own and build practical portfolios aligned with their financial goals. His approach to investing centres on making thoughtful choices today to create greater financial freedom in the future. Areas of Expertise Canadian stocks, dividend investing, TFSAs, RRSPs, real estate investment trusts (REITs), personal finance, cryptocurrency, and long-term wealth building.

Published May 13, 2024 8:30 pm EDT

Investing in REITs (real estate investment trusts) is one of the best long-term opportunities to consider. There are plenty of reasons for that view, and more than a few REITs to buy hand over fist this month.

Here’s a look at a trio of REITs investors will look to buy hand over fist right now.

Consider this REIT for buy-and-forget income

Let’s start our list of REITs to buy hand over fist with RioCan Real Estate (TSX: REI.UN). RioCan is one of the largest REITs in Canada, with a portfolio of nearly 190 properties across the country.

RioCan’s portfolio has leaned towards commercial and retail properties, but in recent years, that mix has shifted to include mixed-use residential properties.

RioCan calls those RioCan Living, and they represent an opportunity for investors looking at REITs to buy hand over fist. That’s thanks to a few key reasons.

First, there’s the lack of housing in Canada’s major metro areas. This is pushing first-time homebuyers outside of metro areas where costs are more affordable. In contrast, RioCan’s growing residential portfolio is focused on key spots in metro areas, specifically along transit corridors where commute times are minimal.

Second, this caters to a shift away from traditional retail brick-and-mortar retail. The mixed-use properties in the RioCan Living portfolio comprise residential towers sitting atop several floors of retail. Again, the prime location comes into play.

Finally, we have the risk of investing itself. Compared with a traditional downpayment on a rental property, investing in RioCan can provide a juicy income with only a fraction of the investment and risk.

Speaking of income, RioCan offers a monthly distribution that currently boasts a yield of 6.27%. This means a $40,000 investment in RioCan will generate a monthly income just shy of $210.

Speaking of retail…

Not all of the commercial retail segment is witnessing a decline. Some superb brands continue to grow strongly, and some of those properties are owned by CT REIT (TSX: CRT.UN).

For those unfamiliar with the REIT, CT has a portfolio of over 370 properties stretching across the country that collectively boast a leasable area of over 30 million square feet. Among the core tenants in that portfolio is Canadian Tire, which also happens to be the controlling unitholder.

Both work in lockstep to bolster growth and provide a very appetizing monthly distribution. That growth includes a whopping $150 million spent last year to add over 800,000 square feet to its massive portfolio.

And despite that immense growth, the REIT still boasts over 99% occupancy.

Turning back to income, as of the time of writing, CT boasts a juicy 6.65% yield, handily making it one of the REITs to buy hand over fist right now. Prospective investors will also love that CT does provide bumps to that distribution.

In fact, the most recent bump was a 3% increase announced just this month.

Some food for thought (and income)

Some of the best long-term options for investors, which include the REITs to buy hand over fist, are what I like to call everyday stocks. These are companies that represent businesses that we interact with daily.

This not only gives them somewhat of a defensive moat but can also be a long-term driver of growth.

Enter Slate Grocery (TSX: SGR.UN), which is the third REIT to buy hand over fist right now. Slate invests in grocery-anchored real estate sites. Grocery stores are highly defensive and less likely to change over or close down like other retail segments.

Toronto-based Slate owns over 110 properties located across the U.S. market. These provide Slate with a steady source of revenue, which the company then uses to invest in improvements and new acquisitions, which drive rent prices higher.

The result is a defensive REIT that boasts massive long-term growth that pays out a juicy distribution.

As of the time of writing, that distribution is an insane 10.96%. Part of the reason for that massive yield is that the stock price has dropped a whopping 23% in the trailing two years.

Still, investors looking to buy REITs hand over fist should keep in mind that Slate is a long-term option that can provide substantial income.