2 Canadian Dividend Stock REITs to Watch While Still Cheap

Are you looking for income? These two dividend stocks offer cheap prices and long-term growth.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published August 26, 2024 4:20 pm EDT

Finding cheap dividend stocks on the TSX is like stumbling upon a hidden treasure chest. Only instead of gold, it’s packed with future potential and steady income. When you scoop up these affordable gems, you’re not just buying into a company. You’re securing a stream of dividends that can grow over time. The beauty of cheap dividend stocks is that they often have room to increase their payouts as they expand, meaning your returns can grow while you hold onto the shares. Plus, because you’re getting in at a lower price, you have the chance to benefit from capital appreciation if the stock’s value rises.

Another perk of cheap dividend stocks is the peace of mind they offer. These stocks tend to be from companies that prioritize paying dividends, which can provide a cushion during market volatility. Even when the market wobbles, those dividend payments can keep rolling in, helping to offset any dips in share price. It’s like having a financial safety net that pays you to stay invested. And since the TSX is home to many well-established, dividend-paying companies, you’ve got plenty of options to build a portfolio that’s both affordable and income-generating. So, why not start hunting for those bargains? Your future self might just thank you.

CT REIT

CT REIT (TSX: CRT.UN) has a solid track record thanks to its close relationship with Canadian Tire, which has been its main tenant since day one. This strong anchor tenant has provided a stable and reliable income stream, making this real estate investment trust (REIT) a consistent performer in the real estate market.

With a history of high occupancy rates and strategic property acquisitions, CT REIT has proven its ability to manage assets effectively, maintaining profitability even during economic fluctuations. The REIT’s impressive operating margin of 76.36% and consistent dividend yield of around 6.5% show just how resilient and rewarding this investment has been for its shareholders.

Looking ahead, CT REIT is poised for future growth, driven by its strategic focus on expanding its portfolio and enhancing its properties. The REIT’s financial health, with a manageable debt-to-equity ratio and solid cash flow, supports this growth strategy. As Canadian Tire continues to grow and expand, so too does the opportunity for CT REIT to increase its rental income and, consequently, its dividends.

Investors can look forward to the potential for capital appreciation as the REIT’s properties increase in value and as it continues to distribute a generous portion of its earnings to shareholders. So, whether you’re in it for the steady income or the growth potential, CT REIT offers a bit of both, making it an attractive option for long-term investors.

CAPREIT

Canadian Apartment Properties REIT (TSX: CAR.UN) has long been a reliable player in the Canadian real estate market. The REIT specializes in residential rental properties that cater to a broad demographic. Its ability to generate consistent revenue, even during economic downturns, is a testament to its strong management and strategic asset selection.

With a portfolio that spans across Canada and even into Europe, CAPREIT has diversified its holdings. This reduces risk and ensures steady income streams. Its operating margin of 61.59% and substantial earnings before interest, taxes, depreciation, and amortization (EBITDA) of $668.82 million underscore its efficiency and profitability. Over the years, CAPREIT’s ability to maintain and grow its dividend has made it a favourite among income-seeking investors.

Looking to the future, CAPREIT is well-positioned for growth, especially as demand for rental properties continues to rise in major urban centres. With a market cap of $8.31 billion and a healthy cash flow, CAPREIT has the financial muscle to continue expanding its portfolio and upgrading its existing properties.

The company’s strategic focus on high-demand areas and its ability to adapt to market changes make it a strong candidate for continued growth. Investors can expect CAPREIT to benefit from increasing rental rates and occupancy levels, which should translate into higher dividends and capital appreciation over time. In short, CAPREIT offers a compelling blend of stability and growth potential, making it a solid choice for those looking to invest in the Canadian real estate market.