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.

| More on:

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Created with Highcharts 11.4.3Ct Real Estate Investment Trust PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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.

Created with Highcharts 11.4.3SmartCentres Real Estate Investment Trust PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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.

Should you invest $1,000 in Ct Real Estate Investment Trust right now?

Before you buy stock in Ct Real Estate Investment Trust, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Ct Real Estate Investment Trust wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »