How to Build a Monthly Passive-Income Stream With Canadian REITs

These two monthly dividend stocks will create passive income you can live off of for life, and now is the time to buy.

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The market is starting to recover, and with interest rates coming down, one of the best places to get in on the action is through real estate investment trusts (REITs). REITs can provide you with monthly passive income as well as returns as the TSX recovers.

Today, let’s look at two REITs investors should consider for monthly passive income and, of course, how much you could get.

CT REIT

First up, we have CT REIT (TSX:CRT.UN). This REIT is associated with Canadian Tire and offers a forward dividend yield of 6.96% as of writing. It has a solid dividend payout ratio of 94%, indicating a sustainable dividend stream. CT REIT’s portfolio is diverse, including retail properties, which helps provide stability.

In terms of its historical performance, CT REIT has a history of consistent dividend payments, which is crucial for investors relying on steady income. This consistency is backed by the strong performance and financial health of its anchor tenant, Canadian Tire. Approximately 90% of CT REIT’s rental income comes from Canadian Tire and its subsidiaries. This high-quality tenant base ensures a low vacancy rate and reliable rental income.

Furthermore, since its inception, CT REIT has shown a steady increase in its asset base and rental income. This growth has been driven by strategic property acquisitions and developments, enhancing its overall portfolio value.

CT REIT’s portfolio includes a wide range of retail properties across Canada. Its properties are strategically located and primarily leased to Canadian Tire, providing a stable rental income stream. CT REIT continues to focus on expanding its property portfolio through strategic acquisitions and developments. This growth strategy aims to enhance its income-generating capabilities and diversify its revenue sources.

SmartCentres REIT

Known for its retail properties anchored by Walmart, SmartCentres REIT (TSX:SRU.UN) provides another strong option. It currently holds a forward dividend yield of 8.47%. Its strong tenant base and strategic property locations make it a reliable option for generating consistent income. And its 103% payout ratio shows it can support a dividend, while also putting cash towards growth.

SmartCentres REIT has a strong track record of consistent dividend payments, supported by its stable tenant base and long-term leases. This reliability is crucial for income-focused investors. Historically, SmartCentres has shown consistent growth in its funds from operations (FFO), which is a key metric for REIT performance. This growth has been driven by strategic property acquisitions and developments, enhancing its overall portfolio value.

The REIT owns and manages a portfolio of retail properties across Canada, including over 3,500 stores. Its properties are strategically located and diversified, reducing risk and ensuring stable income streams. It also boasts stable cash flows underpinned by long-term leases with major tenants. This financial stability supports its ability to pay regular dividends. Add in low debt levels, and it’s a strong investment to consider.

Furthermore, SmartCentres REIT is actively involved in expanding its portfolio through new developments and acquisitions. These projects include mixed-use developments combining residential, retail, and office spaces, which are expected to enhance income streams and diversify the portfolio.

Bottom line

With these two REITs on hand, investors can look forward to both growth and passive income in the coming years. So, how much could a $3,000 investment in both stocks bring in during the next year? CT REIT holds a compound annual growth rate of 8% in the last decade, with SmartCentres at 7%. Here is how much shares could be worth should they reach those levels in the next year.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTALNEW SHARE PRICENEW PORTFOLIO TOTAL
CRT.UN$13.38224$0.93$208.32monthly$3,000$14.45$3,236.89
SRU.UN$21.89137$1.85$253.45monthly$3,000$23.42$3,208.86

Investors will have turned their $6,000 investment into $6,445.75, plus dividends. That would create $445.75 in returns and $461.77 in dividends for a total of $907.52 in passive income! That would come to $75.63 each and every month.

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 Amy Legate-Wolfe has positions in Walmart. The Motley Fool recommends SmartCentres Real Estate Investment Trust and Walmart. The Motley Fool has a disclosure policy.

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