Establishing a passive-income stream with the right stock can make all the difference to a portfolio. Fortunately, the market provides plenty of great stocks to consider that can help fuel your portfolio to new highs.
One of those stellar investments to consider right now is RioCan Real Estate (TSX: REI.UN). Here’s why you should consider adding this passive-income stream gem to your portfolio today.
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Meet RioCan
RioCan is one of the largest REITs in Canada. Historically, RioCan has catered more to the commercial real estate sector, but in recent years the REIT has shifted into the residential market.
For those unfamiliar with the company, RioCan has a portfolio of over 180 properties comprising an insane 35.6 million square feet of leasable area. Those properties are located across Canada, but overwhelmingly in major metro markets.
The tenant list for RioCan’s commercial retail portfolio comprises some of the largest names in retail and business. In other words, RioCan has a stable, diversified list of tenants from multiple segments of the market.
While this segment does provide investors with a tasty passive-income stream (more on that in a bit), it’s RioCan’s growing mixed-use residential market that should appeal to investors.
RioCan Living
RioCan’s growing mixed-use residential portfolio is referred to by the company as RioCan Living. The segment comprises of residential towers that sit atop several floors of retail.
Additionally, the properties themselves are in high-traffic transit corridors across major metro markets. This makes them in-demand options for those seeking shorter commute times.
For prospective investors, there are several key advantages to note.
First, there’s risk, or more accurately, the lack of risk. Unlike the traditional alternative of owning a single rental property, the risk with RioCan is spread across hundreds of units that boast an occupancy rate north of 97%.
Even better, investors can take solace in knowing that there’s no need for maintenance, costly repairs, or chasing down tenants. If anything, owning shares of RioCan can mimic being a landlord, even down to the monthly distribution.
As of the time of writing, RioCan offers an appetizing 5.5% yield. This means that investors who can drop $40,000 into RioCan (always as part of a well-diversified portfolio) can earn a monthly income of over $180.
Would-be landlords should note that the investment example above is considerably less than an average downpayment on a single property. It also doesn’t have a mortgage, tenant, or property taxes to worry about.
And because there’s no mortgage or repairs, investors can pocket that income or choose to reinvest it until needed. This will allow any eventual income to grow further.
In short, it’s a perfect passive income stream that you can buy now and hold for decades.
Build out your passive income stream
No investment is without some risk. In the case of RioCan, the company isn’t only about establishing a great passive income stream, but also as a potential growth stock.
RioCan’s venture into the residential market represents a massive growth opportunity. This more than offsets the expected dip in more traditional commercial retail lots as e-commerce continues to expand.
In my opinion, RioCan represents a stellar option to establish or enhance a passive income stream. Investors should consider this REIT as part of any well-diversified long-term portfolio.
