REITs (real estate investment trusts) own and operate income-producing properties. These companies must pay at least 90% of their taxable income to their shareholders as dividends, thus making them excellent investments for income-seeking investors. Against this backdrop, let’s look at three top REITs that offer healthy dividend yields.
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SmartCentres Real Estate Investment Trust
SmartCentres Real Estate Investment Trust (TSX: SRU.UN) operates 195 fully integrated commercial and residential properties at key intersections across Canada, with a gross leasable area of 35.3 million square feet. It has a solid tenant base, with 95% having a national or regional presence and 60% providing essential services. Given its strategically located properties and solid tenant base, the company enjoys a healthy occupancy rate of 98.4% as of March 31.
Moreover, the Toronto-based REIT has municipal approvals to develop 59.1 million square feet of properties, with one million square feet under construction. With several properties projected to open in the coming quarters, I expect the uptrend in the company’s financials to continue, supporting its future dividend payouts. Meanwhile, the REIT currently offers a monthly dividend of $0.1542/share, translating into a forward dividend yield of 7.28%. The company trades at a reasonable NTM (next-12-month) price-to-earnings multiple of 13, making it an excellent buy.
RioCan Real Estate Investment Trust
Second on my list is RioCan Real Estate Investment Trust (TSX: REI.UN), which owns and operates 177 properties in prime locations nationwide. The company leased one million square feet of properties in the first quarter, including 0.2 million square feet of new leases, thus expanding its occupancy rate to 98%. Along with these strong leasing activities, the company witnessed a 3.6% increase in its commercial same-property net income, while its blended spread improved from 14% in the previous year’s quarter to 17.5%.
Amid these solid operating performances, the company’s FFO (funds from operations) per unit increased 8.9% to $0.49. Also, it ended the quarter with liquidity of $1.4 billion, while its adjusted debt-to-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) ratio improved marginally to 8.96. So, it could continue funding its growth initiatives. The company has a solid developmental pipeline of 48.3 million square feet of properties, with 0.9 million square feet of projects under construction. Given its growth prospects and an attractive payout ratio of 62%, I expect RioCan to continue rewarding its shareholders with healthy dividends. Its monthly payout of $0.0965/share translates into a forward dividend yield of 6.69%.
NorthWest Healthcare Properties REIT
My final pick is NorthWest Healthcare Properties REIT (TSX:NWH.UN), which owns and operates highly defensive healthcare properties. The company enjoys healthy occupancy and collection rates due to its government-baked tenant base and long-term lease agreements (weighted average lease expiry of 13.6 years).
Moreover, the Toronto-based healthcare REIT has sold $260 million of non-core assets this year as of May 14, utilizing the net proceeds for debt repayments. It has strengthened its balance sheet through debt repayment and refinancing initiatives. It also received a credit rating of BBB (investment-grade rating) in February, which could lower its borrowing costs. Further, the company’s liquidity currently stands at $268 million, thus supporting its growth initiatives. The company’s strong renewal rate and growing same-property net property income could boost its financials in the coming quarters, allowing it to continue paying dividends at a healthier rate. Meanwhile, it currently offers a forward dividend yield of 7.63%.
