Are you looking for quality real estate investment trusts (REITs) to buy with $1,000?
If so, the Canadian markets have a lot of what you’re looking for. Canada is well known for its hot real estate market, which features some of the highest prices and rents in the developed world. Although this fact forms the basis of many complaints about housing affordability, it is also a positive for investors.
It’s not just housing that commands a premium price tag in Canadian real estate. Office, storage and mall rents are likewise high. If you’re looking to add some dividend income to your portfolio in 2025, real estate might be just the pond you want to play in. In this article, I share one under-the-radar TSX REIT that could be worth buying with $1,000.
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Killam
Killam Apartment REIT (TSX:KMP.UN) is a Canadian residential REIT. The REIT is known for having a lot of apartments on the East Coast in cities like Halifax, St. John’s, and Moncton. These markets are seeing steady increases in rental rates, in many cases outpacing the historically pricier Ontario and B.C. markets. That’s in no small part because of people moving from Ontario and B.C. to the Maritimes in order to avoid high rents!
Dividend potential
Like many REITs, Killam Apartment offers considerable income potential. The REIT pays a $0.06 dividend every month, which works out to $0.72 per year. At today’s unit price of $17.51, therefore, KMP has a 4.11% dividend yield. If you invest $100,000 in this REIT, you should get $4,112 in dividend income if the dividend doesn’t grow or gets cut. In subsequent paragraphs, I’ll show that KMP’s dividend is not at particular risk of being cut — it may even increase again!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Killam Apartment REIT | $17.51 | 5,711 | $0.06 per month ($0.72 per year) | $342.66 per month ($4,112 per year) | Monthly |
Performance
One reason why Killam Apartment REIT’s dividend is so reliable is because the company is performing well. In the trailing 12-month period, the REIT grew its revenue by 3.3%, its funds from operations (FFO) by 2.6%, and its operating cash flows by 14.5%. Obviously, this is not lightning-fast growth, but it’s serviceable by REIT standards. Trading at 14 times earnings and 18 times adjusted funds from operations (AFFO), Killam Apartment REIT does not need a ton of growth in order to be worth the investment. Also, the REIT is highly profitable, with a 61% operating income margin and a 65% FFO to gross profit ratio. These metrics indicate that KMP.UN’s dividend is fairly safe.
Valuation
Killam Apartment REIT is pretty modestly valued going by several key metrics. At a $17.51 stock price, it trades at the following multiples:
- 14 times earnings
- 15 times FFO
- 18 times AFFO
- 0.69 times book
The price-to-book ratio is truly rock-bottom, while the earnings and FFO multiples are about average for REITs of Killam’s type. So, those investing in Killam today are not paying an overly high price for what they’re getting.
Foolish takeaway
If you have $1,000 that you’re looking to invest in REITs, Killam Apartment REIT is a name you could definitely consider. The REIT is profitable, growing and financially sound — it’s not all that often you find all three of these characteristics in a single REIT. So, Killam is above average.
