Real estate investment trusts (REITs) are some of the best long-term options for both growth and income-seeking investors to consider for any portfolio. But where should investors start when looking for REITs to buy and hold forever?
Here’s a look at three solid REITs to buy and hold forever.
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Choice Properties REIT: A top defensive pick
Let’s start with a fairly defensive option, Choice Properties REIT (TSX: CHP.UN). For those unfamiliar with the REIT, Choice Properties boasts a portfolio of approximately 700 mainly retail properties. To a lesser extent, Choice Properties also has a smaller portfolio of industrial spaces.
The retail space is comprised largely of grocery-anchored sites, more specifically, some of the largest retailers in Canada. This provides significant defensive appeal for investors who are looking for some REITs to buy and hold forever.
Turning to income, Choice Properties offers an appetizing monthly distribution with a yield of 5.72%. This means that a $30,000 investment into Choice Properties will provide investors with a juicy monthly income of just shy of $140.
Own some industrial real estate
Investors looking for some REITs to buy and hold forever should also take a look at what Granite REIT (TSX: GRT.UN) can offer. In total, Granite boasts a portfolio of approximately 140 properties located across both Europe and North America.
Granite’s portfolio has a focus on industrial and warehouse properties, which holds significant potential that is often dismissed. That’s because the demand for industrial warehousing space continues to grow, fueled by strong e-commerce growth.
In terms of distributions, Granite offers a juicy 5.01% yield paid out on a monthly cadence. To put that into context, a $30,000 investment in Granite will generate just over $125 each month.
One final reason to consider owning Granite is that the REIT has seen its price drop nearly 10% over the trailing 12-month period despite that long-term appeal.
Given its growth potential, juicy divided and current discount, Granite is handily one of the REITs to buy and hold forever.
Become a landlord without a mortgage
RioCan Real Estate (TSX: REI.UN) is another one of the REITs to buy and hold forever. RioCan has historically focused on commercial retail properties, but in recent years that has shifted to include mixed-use residential properties.
Those residential properties represent a sweet spot for prospective investors looking at REITs to buy and hold forever. This includes would-be landlords who have been priced out of the market.
RioCan’s growing portfolio of mixed-use properties, which the company refers to as RioCan Living, is focused on the major metro areas of Canada. More specifically, those properties are located along high-traffic transit corridors that are in high demand.
The real advantage of owning RioCan comes in the form of a traditional alternative to generating passive income- owning a rental property. An investment in RioCan offers investors the ability to spread risk out over dozens, if not hundreds, of units at a considerably lower upfront and ongoing cost.
And like a landlord collecting rent, RioCan offers a monthly distribution. As of the time of writing, RioCan offers a 6.00% yield. This means that a $30,000 investment in RioCan (which is much less than a downpayment on a rental property) will generate nearly $150 each month.
Perhaps best of all, the income generated from RioCan comes without a mortgage, property taxes, or maintenance costs.
Final thoughts on the REITs to buy and hold forever
All stocks, even the trio of REITs above, carry some risk. That’s why the importance of diversifying your portfolio with some defensive holdings cannot be stated enough.
Fortunately, the REITs mentioned above can provide a growing source of income as well as some defensive appeal for long-term investors.
In my opinion, one or all of the above should be core holdings in any well-diversified portfolio.
