If you want steady monthly passive income from stocks, real estate investment trusts (REITs) are a fantastic place to find it. There are many benefits to owning REIT stocks as investments.
Many benefits to owning REITs over your own commercial properties
Firstly, you get to own high-quality real estate assets that most people would never be able to acquire on their own. Secondly, you have no management responsibility of those assets. You collect your monthly distribution cheques, and there is not much else to do. Most Canadian REITs trade with a yield of 3% or higher.
Lastly, most Canadian REITs are trading at attractive valuations. Compared to U.S. peers, you can buy similar or better-quality assets at a 15% discount or better.
REITs pay great passive income and are cheap today
If you want to own real estate for passive income, now is a great time to start adding REITs. Interest rates continue to come down, and that should have an upward lift on interest-sensitive real estate stocks.
You may have to be a little patient for this to play out, but at least you will collect some monthly passive income while you wait. In fact, here are three smart REITs to look at buying before it is too late.
A top apartment REIT for value and passive income
With its stock down 9% in 2024, it has been a tough year for Minto Apartment REIT (TSX:MI.UN). Factors like declining immigration and an oversupply of condos in the Greater Toronto region are making investors worried about apartment REITs.
Despite this, the REIT has been performing very well. It has sold off non-core assets and rapidly paid down debt. Its balance sheet is in strong shape today.
Its well-located apartments continue to enjoy high single-digit rent growth. Year to date, funds from operation (FFO) per unit (a core measure of profitability) have increased by 25%.
Minto yields 3.6% today. This passive-income stock just increased its distribution by 3%. That is its sixth since 2018.
It trades at a 34% discount to the private market of its assets. Why buy private real estate when you get such a high-quality portfolio (and management team) for 66 cents to the dollar?
A top TSX industrial REIT
Granite REIT (TSX:GRT.UN) is another monthly passive income stock you don’t want to miss. This is one of the highest-quality REITs in Canada.
It has institutional quality logistics and manufacturing properties across Canada, the U.S., and Europe. It is managed by a very prudent executive team and has one of the best balance sheets amongst Canadian REITs. While the REIT’s occupancy has recently declined, it has continued to deliver high single-digit cash flow growth.
Granite has a 4.4% distribution yield. It has increased its distribution for 14 consecutive years. It is trading at a 16% discount to its private market value and a large discount to American peers with similar quality.
A top retail REIT that is still a bargain
If you want steady monthly passive income from stocks, real estate investment trusts (REITs) are a fantastic place to find it. There are many benefits to owning REIT stocks as investments.
Many benefits to owning REITs over your own commercial properties
Firstly, you get to own high-quality real estate assets that most people would never be able to acquire on their own. Secondly, you have no management responsibility of those assets. You collect your monthly distribution cheques, and there is not much else to do. Most Canadian REITs trade with a yield of 3% or higher.
Lastly, most Canadian REITs are trading at attractive valuations. Compared to U.S. peers, you can buy similar or better-quality assets at a 15% discount or better.
REITs pay great passive income and are cheap today
If you want to own real estate for passive income, now is a great time to start adding REITs. Interest rates continue to come down, and interest-sensitive real estate stocks should have an upward lift.
You may have to be a little patient for this to play out, but at least you will collect some monthly passive income while you wait. In fact, here are three smart REITs to look at buying before it is too late.
A top apartment REIT for value and passive income
With its stock down 9% in 2024, it has been a tough year for Minto Apartment REIT (TSX:MI.UN). Factors like declining immigration and an oversupply of condos in the Greater Toronto region are making investors worried about apartment REITs.
Despite this, the REIT has been performing very well. It has sold off non-core assets and rapidly paid down debt. Its balance sheet is in strong shape today.
Its well-located apartments continue to enjoy high single-digit rent growth. Year to date, funds from operation (FFO) per unit (a core measure of profitability) have increased by 25%.
Minto yields 3.6% today. This passive-income stock just increased its distribution by 3%. That is its sixth since 2018.
It trades at a 34% discount to the private market of its assets. Why buy private real estate when you get such a high-quality portfolio (and management team) for 66 cents to the dollar?
A top TSX industrial REIT
Granite REIT (TSX:GRT.UN) is another monthly passive-income stock you don’t want to miss. This is one of the highest-quality REITs in Canada.
It has institutional quality logistics and manufacturing properties across Canada, the U.S., and Europe. It is managed by a very prudent executive team and has one of the best balance sheets amongst Canadian REITs. While the REIT’s occupancy has recently declined, it has continued to deliver high single-digit cash flow growth.
Granite has a 4.4% distribution yield. It has increased its distribution for 14 consecutive years. It is trading at a 16% discount to its private market value and a large discount to American peers with similar quality.
A top retail REIT that is still a bargain
First Capital REIT (TSX:FCR.UN) is another Canadian REIT that is not being fairly acknowledged by the market. It has one of the premier retail property portfolios in Canada. Its properties are urban-focused and grocery-anchored.
Over 85% of its tenants provide essential services, so it has a resilient base of tenants. Its great locations have been supporting above-industry average rental rate growth. That has translated into strong cash generation.
Yet, the market hardly recognizes it. First Capital trades with a nice 4.8% yield. It also trades a low to mid-teens discount to net asset value.
With its ample land assets and development opportunities, it should trade at a premium, but you can still swipe it up at a bargain price. Collect a great stream of monthly passive income while you wait for its value to be uncovered.
