If you’ve ever thought about owning rental property for passive income, let me stop you right there. Between the headaches of mortgage payments, repairs, and bad tenants, being a landlord is far from passive. That’s why I prefer a simpler route: earning rent without owning any property myself.
One of the easiest ways to do that is with a real estate investment trust (REIT) exchange-traded fund (ETF) like Middlefield Real Estate Dividend ETF (TSX:MREL). It pays you monthly, currently yields around 7.5%, and spares you from clogged toilets, midnight calls, and property tax bills. Here’s why this ETF deserves a spot in any income-focused portfolio.
What is MREL?
Real estate investment trusts, or REITs, are companies that own and operate income-generating properties. In Canada, REITs are structured to pay out the majority of their income to unitholders, making them popular choices for investors seeking regular cash flow. An ETF is simply a basket of investments that trades like a stock.
Put them together, and you get a REIT ETF—an easy, diversified way to invest in real estate without the hassle of buying individual properties or stocks. MREL does exactly that.
It holds a diversified portfolio of commercial real estate companies across multiple sectors. These include industrial warehouses, data centres, retail outlets, healthcare facilities, telecom towers, residential buildings, and office space. In other words, you’re not relying on any one part of the real estate market to drive performance.
As of April 30, 2025, MREL had about 80% of its exposure in Canadian REITs, with another 19% in the U.S. and a small slice internationally.
Sector-wise, the ETF is heavily tilted toward multi-family residential and retail REITs, which make up more than half the fund. But it also has meaningful allocations to healthcare, industrial, and even niche real estate like telecom towers and data centres.
Why MREL?
At its current monthly distribution of $0.075 per share and a market price of $12, MREL offers a forward yield of 7.5%. That’s a strong income stream, especially when you compare it to the typical cap rate on residential rental properties in Canada, which often falls between 4% and 6%.
A cap rate, short for capitalization rate, is a simple measure of a property’s income potential. It is calculated by dividing the net rental income by the property’s market value. The higher the cap rate, the better the return. With MREL, you’re essentially getting a better yield than many landlords without the work of screening tenants, fixing leaks, or worrying about vacancies.
And there’s another edge: taxes. Unlike rental property income, where you can’t deduct mortgage interest or maintenance costs in a Tax-Free Savings Account or Registered Retirement Savings Plan or First Home Savings Account, MREL can be held in all three. That means your income can compound tax-free or tax-deferred depending on the account.
