If you’re looking to build a passive income stream through real estate, Canadian real estate investment trusts (REITs) offer an excellent opportunity. With as little as $1,000, you can invest in a diversified portfolio of properties across various sectors like retail, industrial, and residential. Here are three solid Canadian REITs to consider as long-term, buy-and-hold investments.
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1. Choice Properties REIT: A defensive pick
For investors seeking stability and a solid income stream, Choice Properties REIT (TSX: CHP.UN) is a good consideration. With a portfolio of over 700 properties — primarily grocery-anchored retail spaces — this REIT offers a safe and diversified way to gain exposure to real estate. Roughly 82% of its assets are necessity-based, providing consistent demand regardless of economic cycles. Additionally, 20% of its portfolio is industrial real estate, an increasingly attractive sector as e-commerce grows.
The trust’s primary tenant, Loblaw, contributes to about 57% of its revenue, which helps provide a stable cash flow. Choice Properties is a reliable income generator. Particularly, because the stock is down 13% from its peak of $15 per unit, it now offers an attractive cash distribution yield of 5.8%.
Analysts believe the stock is undervalued, with a 17% discount to its fair value and a potential upside of 20%. Over the next three years, investors could see an annualized return of around 12%, with the foundation from its consistent cash distributions.
2. Morguard North American REIT: Residential stability with upside potential
If you’re interested in a REIT focused on residential properties, Morguard North American REIT (TSX: MRG.UN) could be your go-to. With a portfolio spanning 12,315 residential suites across 16 properties in Alberta and Ontario, plus additional properties in the United States, it offers significant diversification. The trust’s occupancy rate remains impressively high — 98% in Canada and 92% in the U.S. — which speaks to the strength of its property management and demand for housing.
The stock has seen a relatively mild sell-off compared to its Canadian peers, down about 11% from its 2024 high of $19 per unit. Trading at $16.85, it offers a reliable cash distribution yield of 4.5%. Over the next three years, the stock could deliver annualized returns of 14%, making it a strong candidate for long-term growth and income.
3. Granite REIT: Industrial growth with global exposure
For those seeking exposure to the booming logistics and industrial real estate market, Granite REIT (TSX: GRT.UN) is a top pick. Specializing in the acquisition, development, and management of warehouse and industrial properties, Granite’s diversified portfolio spans across North America and Europe. With 143 properties and nearly 63 million square feet of leasable space, the REIT boasts an occupancy rate of nearly 95% and a weighted average lease term of almost six years, providing both stability and long-term growth potential.
The stock has dipped about 15% from its 2024 high of $80 per unit. At the current price of $68.12, analysts believe it’s undervalued by around 23%, with near-term upside potential of 30%. Even if it takes three years to reach the analyst price target, the stock could still generate an annualized return of 14%, bolstered by its 5% cash distribution yield.
The Foolish investor takeaway: Building a reliable income stream
These three REITs — Choice Properties, Morguard North American, and Granite REIT — offer a diversified mix of income and growth potential. Whether you’re looking for stability in grocery-anchored retail, the long-term resilience of residential properties, or potential higher growth in industrial real estate, these picks provide opportunities for steady returns.
With just $1,000 to invest, you can start building a passive-income stream that grows over time. All three REITs offer solid monthly distributions, making them ideal candidates for a buy-and-hold forever strategy.
