Have you invested in Real Estate Investment Trusts (REITs)? These special types of companies can offer lucrative returns to investors who are ready to invest. In fact, building out a REIT income strategy is easier than you might think.
Here’s a look at how you can build your REIT income strategy with a handful of great picks that can provide those regular payouts.
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Get your fill of groceries and income from this REIT
Slate Grocery REIT (TSX: SGR.UN) is the first name to add to any REIT income strategy. As the name suggests, Slate’s portfolio is focused on grocery stores.
Slate’s portfolio comprises over 120 properties scattered across 24 U.S. states, primarily in major metro markets. Slate’s tenants include some of the largest names in the retail grocery space, but no single tenant owns more than 10% of Slate’s portfolio.
Collectively, the REIT offers more than 15.7 million square feet of leasable area, and Slate maintains an occupancy rate well north of 94%.
The appeal of a grocery-anchored REIT cannot be understated. Groceries are incredibly defensive options that generate reliable revenue streams which are not easily impacted by external factors.
If anything, the impact of trade uncertainty, as we’ve seen this year, will only push consumers more towards buying groceries and necessities rather than spending on eating out.
As part of a REIT income strategy, Slate really shines. The REIT offers investors a tasty monthly distribution, which works out to a yield of 8.3%. This handily makes Slate one of the best-paying options on the market.
Become a landlord, but without tenants
One of the tried-and-true ways of establishing a passive income stream is by investing in a rental property. Unfortunately, rising interest rates and downpayment requirements have priced would-be landlords out of the market.
Fortunately, that’s where RioCan Real Estate (TSX: REI.UN) comes into play as a viable, if not better alternative. RioCan offers investors a portfolio of increasingly mixed-use properties in Canada’s major metro markets.
The properties themselves comprise residential towers sitting atop several floors of retail, located along high-traffic transit corridors. Strong demand for those properties helps to keep occupancy at an incredible 98%.
For a would-be landlord, RioCan offers an opportunity to invest in rental units, but without the mortgage. It also lacks the need for a significant upfront downpayment, or to pay property taxes or deal with tenant concerns.
Let’s also not forget that the investment is spread across hundreds of units rather than a single property. This fact alone makes RioCan a considerably lower risk investment over owning a single rental property.
Perhaps best of all, investors can still get a monthly distribution, much like a landlord collecting rent. As of the time of writing, RioCan offers a juicy 6.8% yield. This makes it a solid candidate for any REIT income strategy.
How about an industrial REIT to balance your portfolio?
One final option for investors looking to establish a REIT income strategy to consider is Granite REIT (TSX: GRT.UN). Unlike RioCan and Slate focused on retail and residential properties, Granite is focused on other property types.
Specifically, Granite’s portfolio comprises industrial properties such as warehouses and distribution centres. In total, Granite boasts over 140 properties across North America and Europe with a total leasing area of over 63 million square feet.
The tenant list for Granite includes some of the largest names in retail and e-commerce. This adds defensive appeal to the REIT’s portfolio, which also boasts an occupancy rate of 94%.
Turning to income, Granite offers a juicy monthly distribution that carries a yield of 5.1%, making it an ideal inclusion into any REIT income strategy.
What’s your REIT income strategy?
Granite, RioCan, and Slate all cater to different segments of the market and offer both growth and defensive appeal. The REITs also offer a monthly distribution that can provide a recurring income stream which can last decades.
Note that prospective investors who aren’t ready to draw on that income yet can opt to reinvest those distributions. This allows your investment to continue to grow until needed.
In my opinion, one or all of the above should be core holdings in any well-diversified portfolio.
Buy them, hold them, and watch your income grow.
