When Canadians think about long-term investing, there’s a lot of talk about growth stocks and tech giants. But for those focused on steady income, especially income sheltered from the Canada Revenue Agency (CRA), real estate investment trusts (REIT) can offer a powerful alternative. And if you’re looking for a stock that could potentially deliver decades of tax-free income inside a Tax-Free Savings Account (TFSA), Granite REIT (TSX:GRT.UN) is one to seriously consider.
Image source: Getty Images
About Granite
Granite isn’t just another REIT. It owns and manages a portfolio of logistics and industrial properties across North America and Europe. These are the warehouses, distribution centres, and facilities that power modern e-commerce and supply chains. As of March 31, 2025, the trust had 161 investment properties totalling 62.8 million square feet, with a property value of $9.4 billion. With large tenants and long-term leases locked in, Granite provides reliable rental income that underpins its attractive monthly distributions.
In the first quarter of 2025, Granite delivered strong results. Revenue was up 11% year over year, reaching $154.7 million compared to $138.9 million in the same period of 2024. Net operating income on a cash basis also climbed 10%, hitting $123 million. What matters most for REIT investors, though, is cash flow. Adjusted funds from operations rose to $1.41 per unit, up from $1.22 last year. That’s a solid 15.6% increase.
The dividend
Granite pays $0.29 per unit per month, which works out to $3.48 annually. At a recent share price around $71, that’s roughly a 4.8% yield. And when held inside a TFSA, that yield is entirely tax-free. That means the income you collect doesn’t count as taxable earnings. It doesn’t affect your Old Age Security (OAS) clawback or push you into a higher bracket. You keep every dollar. Over decades, that adds up significantly, especially with monthly compounding.
But it’s not just the yield that makes Granite appealing. The dividend stock also runs a conservative business. In the latest quarter, its payout ratio was 62%, down from 67% last year. That’s a sign of strength. It means the trust is earning more than it’s paying out, leaving room to reinvest or increase the distribution. It also has plenty of liquidity at over $700 million, and a low leverage ratio of 31%. In a high interest rate environment, that balance sheet discipline matters.
More to come
There’s also growth potential here. Granite has 1.5 million square feet of developments underway, with estimated yields on cost around 7.5%. These projects are pre-leased and expected to add to cash flow in the coming quarters. It’s also investing in sustainability, with 17 rooftop solar projects generating 50 megawatts of clean energy. These efforts don’t just sound good, they reduce energy costs and make Granite more attractive to major tenants.
Of course, Granite isn’t risk-free. Like all REITs, it faces challenges from interest rates and changing property valuations. In this quarter, net income fell to $43.9 million from $89.1 million a year earlier. But that drop was driven by fair value losses on properties, a non-cash item that doesn’t impact the trust’s ability to pay distributions. Cash flow was up. That’s what matters for investors counting on monthly income.
Bottom line
Some may argue that REITs have had their day. That rising rates and slowing economic growth will weigh on performance. But that argument ignores the unique position Granite holds in the market. It’s not an office REIT exposed to remote work trends. It’s not a retail REIT worried about online shopping. It owns logistics and distribution hubs, critical infrastructure for modern business. And it’s diversified across Canada, the U.S., Germany, Austria, and the Netherlands. Right now, just $5,000 could bring in ample annual and monthly dividends!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| GRT.UN | $70.55 | 70 | $3.38 | $236.60 | Monthly | $4,938.50 |
For investors looking to build a reliable, tax-free income stream that can last for decades, Granite checks all the boxes. It offers a strong yield, dependable cash flow, room for growth, and one of the most tax-efficient ways to earn monthly income. Put it in your TFSA, and you’ve got a CRA-friendly machine quietly working for you, year after year.
