Real Estate Investment Trusts, (REITs) are some of the best income-earning investments on the market for investors. In fact, with the right investment strategy, REITs can help to generate $500 every month in your portfolio.
Here’s a look at how and what REITs you need to generate $500 every month.
Image source: Getty Images
Let’s start with some ground rules
Generating $500 every month can be done, but it’s not something that will, in many cases, happen overnight. Instead, it will take additional investment over time, and reinvesting those juicy dividends.
In other words, investors should consider this a long-term endeavour that will take some discipline.
If the end goal is to generate $500 every month, or $6,000 per year, picking the right REITs that can provide a stable and growing monthly income is paramount.
So then, let’s pick our REITs.
Invest in a grocery-anchored REIT
The first REIT to help us generate $500 every month is Slate Grocery REIT (TSX: SGR.UN). As the name implies, slate is a grocery-anchored REIT. Grocers are incredibly defensive options that can provide a reliable and recurring source of revenue.
Part of the reason for that is due to the sheer necessity of the products that grocers sell. Adding to that appeal is Slate’s tenant portfolio, which includes some of the largest and most well-known names in the consumer goods segment of the market.
In terms of coverage, Slate is focused on the U.S. market, where it enjoys a massive portfolio of 116 properties across 23 states. The REIT also boasts an occupancy rate north of 94%.
Turning to income, Slate offers a monthly distribution that works out to an insane yield of 8.2%. Not only is that one of the better-paying yields on the market, but it also means that a $30,000 investment in this REIT will generate just over $200 per month.
Become a landlord, but skip the mortgage
When it comes to passive income streams, one of the tried-and-true ways to generate $500 every month is by owning a rental property. Unfortunately, rising rates and massive down payment requirements have priced many out of the market.
That’s where RioCan Real Estate (TSX: REI.UN) comes into play as an ideal option to consider.
RioCan is one of the largest REITs in Canada, with a portfolio of properties mainly in Canada’s metro market. The REIT has focused historically on commercial retail properties, but in recent years, RioCan has shifted to include mixed-use residential properties.
Those residential properties are where would-be landlords will find solace.
The properties are located along high-traffic transit corridors in metro markets, making them in-demand locations. Adding to that appeal is the fact that investing in RioCan is significantly lower risk when compared to owning a single rental property.
More importantly, it also requires significantly less upfront capital, and does not come with a mortgage, property taxes, or tenant issues.
Turning to distributions, RioCan offers a tasty yield of 5.6%. This means that a similar $30,000 investment will generate just over $160 each month.
Wrap up your portfolio with some retail
One final pick for prospective investors to consider is SmartCentres REIT (TSX: SRU.UN). SmartCentres is a retail-focused REIT, boasting a portfolio of over 190 properties scattered across every province.
Those properties include a wide variety of the largest names in the retail space, with an impressive 98% occupancy.
In addition to its massive portfolio, strong tenant base and high occupancy, SmartCentres also boasts a massive development pipeline of nearly 85 million square feet of development initiatives.
Like the other REITs mentioned above, SmartCentres offers a monthly distribution. As of the time of writing, Smartcentres offers a tasty 7.3% yield. This works out to just over $180 per month, given a similar $30,000 investment.
Generate $500 every month
The REITs mentioned above can help investors generate $500 every month, given a $30,000 investment in each.
| Company | Recent Price | No. of Shares | Dividend | Total Payout | Frequency |
| Slate Grocery REIT | $14.39 | 2,084 | $1.17 | $2,438.28 | Monthly ($203.19) |
| RioCan Real Estate | $17.60 | 1,704 | $1.16 | $1,976.64 | Monthly ($164.72) |
| SmartCentres REIT | $25.32 | 1,184 | $1.85 | $2,190.40 | Monthly ($182.53) |
Prospective investors should also note that investing even $5,000 into each of the above REITs will provide an ample amount of income that, when reinvested, can help to establish that coveted $500 per month level, given a longer period.
In my opinion, one or all of the above should be core holdings in any well-diversified portfolio.
But them, hold them, and watch your future income grow.
