Canadian Tire vs. CT REIT: How I’d Divide $10,000 Between Related Dividend Payers

Which is the better buy among these two dividend stocks?

It’s interesting to think about how different Canadian dividend stocks can fit into an investment plan. This is especially true if you’re looking for regular income through dividends. Two names that often pop up in these discussions are Canadian Tire (TSX: CTC.A) and CT REIT (TSX: CRT.UN). While both provide dividend income to investors, the pair actually operate in quite different parts of the retail world. Canadian Tire is a well-known retailer that sells everything from automotive parts and tools to sports equipment and home goods. CT REIT is a real estate investment trust (REIT) specializing in owning a portfolio of commercial properties. Yet here’s the interesting part: a significant majority of these properties are leased out to Canadian Tire stores. This close relationship creates a unique dynamic for investors to consider. So, which is the better buy?

Paper Canadian currency of various denominations

Source: Getty Images

Canadian Tire

Let’s start by taking a closer look at Canadian Tire. The stock has been a fixture in the Canadian retail landscape for decades. Its network of stores is a go-to destination for a wide range of products that cater to our cars, our homes, and our various hobbies and interests. Looking at the most recent financial update, it reported total revenue of $4.51 billion.

The net income for that quarter reached $227.3 million, which translated to earnings per share of $3.93. Canadian Tire has a long-standing history of sharing a portion of its profits with its investors in the form of dividends and recently declared a quarterly dividend of $1.775 per share. This consistent dividend payout underscores the commitment to returning value to those who hold the stock. As a retailer with a strong brand presence across Canada, Canadian Tire’s performance is often seen as a reflection of the broader Canadian consumer economy.

CT REIT

Now, let’s shift our focus to CT REIT. CT REIT is primarily involved in the business of owning and managing income-producing commercial real estate. What makes CT REIT particularly interesting is its close ties to Canadian Tire. A significant portion of the properties in CT REIT’s portfolio are strategically located and leased to Canadian Tire stores under long-term agreements. This arrangement provides CT REIT with a relatively stable and predictable stream of rental income.

In its latest financial report for the first quarter of 2025, CT REIT announced that total revenue was $145.4 million, and net income reached a substantial $199.7 million. For investors who are looking for a regular income stream, CT REIT offers monthly distributions. It also declared a monthly distribution of $0.0771 per unit for April 2025. This translates to an annualized distribution rate of $0.9252 per unit. The stability of CT REIT’s income is largely tied to the long-term leases they have in place with a well-established tenant like Canadian Tire.

Foolish takeaway

An investor might consider strategically allocating $10,000 in funds between Canadian Tire and CT REIT to achieve a balance between growth and income. For instance, an investor who is looking for a bit more growth potential, along with a solid dividend, might choose to allocate a larger portion of their investment. For example, $6,000 to Canadian Tire. This would provide exposure to the performance of the retail sector and the potential for the stock price to appreciate over time in addition to the quarterly dividend income.

The remaining $4,000 could then be invested in CT REIT to benefit from its steady and consistent monthly income distributions. This kind of allocation strategy aims to leverage Canadian Tire’s potential for growth and possible future dividend increases. Meanwhile, simultaneously relying on the more predictable and frequent distributions from CT REIT for a more immediate and stable income component to the portfolio.

However, it’s absolutely essential for any investor to carefully consider their own individual investment goals, risk tolerance, and overall financial situation. Especially when determining the appropriate allocation of funds between these two dividend-paying entities, or any other investments for that matter. It’s always a wise idea to seek advice from a qualified financial advisor before making any investment decisions.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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