2 REITs Worth Buying With $10,000 for Long-Term Income Generation

Killam Apartment REIT (TSX:KMP.UN) and another top cash cow are worth buying right now.

New investors looking to give their passive-income stream a bit of a kickstart may have the opportunity to do so going into July as select real estate investment trusts (REITs) begin to pick up a bit of meaningful traction. Indeed, buying the REITs on strength has been challenging to do in recent years, but as interest rates begin to descend and investors adopt more of a value-conscious mindset, I think that the REITs may finally have what it takes to sustain some gains en route to prior highs.

Sure, the Bank of Canada’s more dovish tilt may already be priced into some REITs, but the following names, I believe, are still cheap with yields that are more than worth collecting as we inch closer to the second half of 2025 (can you believe the book is almost closed on the first half already?).

Without further ado, here is a pair of high-yield REITs with steady, well-covered distributions.

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Killam Apartment REIT

First, we have shares of Killam Apartment REIT (TSX: KMP.UN), which are fresh off a 24% melt-up off 52-week highs. Indeed, it’s hard to justify chasing such a red-hot bounce, but with shares still down more than 16% from their late 2021 highs, I think there’s significant value to be had for buyers on recent strength.

Of course, a pullback would be nice, but I’m not so sure we’ll get one following a fairly decent quarter and hope for more rate cuts from the Bank of Canada. In any case, the 3.7% yield isn’t all too impressive, especially considering there are some REITs offering yields close to double nowadays. Either way, if you seek a good mix of capital appreciation and yield, I’d look no further than the well-run residential REIT, as it looks to bolster its robust residential portfolio. As funds from operations (FFOs) go on the uptrend, count me as unsurprised if a nice distribution hike is in the cards over the medium term.

CT REIT

If you want more value and yield, CT REIT (TSX: CRT.UN) stands out as a bargain while it’s going for around $16 per share. The yield currently stands at 5.8%, which is significantly lower than it was for most of the past year. Indeed, shares have bounced 16% from their April lows. And while the recent rally may end in a correction, I wouldn’t be afraid to keep building a position over time (let’s say buying in $2,000 increments if you’re looking to put $10,000 to work) in an attempt to ride out the waves better.

With a 0.85 beta, the name is slightly less correlated to the TSX Index, which can be a good thing if you’re looking to reduce your portfolio’s volatility levels. In any case, the main draw to CT REIT, I believe, has to be resilience in its top retail tenant, Canadian Tire, which has a stellar balance sheet and the means to power higher despite the macro headwinds facing Canada’s economy. Of course, the retail REIT isn’t the most diversified in the world, but personally, I’d much rather have more exposure to a top-tier tenant than broad exposure to a bunch of semi-decent ones.

Fool contributor Joey Frenette 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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