Retirement should be about peace of mind. But for many Canadians, Old Age Security (OAS) comes with a catch: the clawback. Once your income crosses a certain line, those benefits start to disappear. That’s where stable, tax-efficient income becomes key. One dividend stock worth a closer look for retirees is Choice Properties Real Estate Investment Trust (TSX: CHP.UN).
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About Choice
Choice Properties is Canada’s largest REIT by gross leasable area and asset value. Its portfolio includes over 700 properties, mostly made up of retail and industrial assets. What makes it stand out is the quality of its tenants. Around 57.3% of its rent comes from Loblaw, a name most Canadians know. These grocery-anchored properties tend to hold up well in downturns, making them ideal for retirees who want income with fewer surprises.
In its most recent earnings report, Choice Properties showed why it deserves attention. In the first quarter of 2025, rental revenue rose to $346.9 million, up 2.6% from the same period last year. Net operating income came in at $245.8 million. The dividend stock reported funds from operations (FFO) of $0.264 per unit, up from $0.259 last year. Adjusted funds from operations (AFFO), which better reflects cash available for distribution, was $0.249 per unit, up from $0.239. The monthly distribution is $0.064 per unit, or $0.77 annually, giving investors a yield of just over 5% at recent prices.
A strong dividend
A 5% yield may not sound flashy, but it’s steady. And more importantly, it’s backed by tenants that tend to stick around. Loblaw has little incentive to leave properties it both rents and operates in. That stability can offer comfort for investors relying on predictable income to supplement government benefits like OAS. Right now, a $5,000 investment could bring in $261.80 annually, and about $22 every month!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| CHP.UN | $14.68 | 340 | $0.77 | $261.80 | Monthly | $4,991.20 |
But let’s be realistic. Even strong REITs come with risks. Rising interest rates, for example, can push up financing costs. And while Choice has kept its balance sheet in decent shape, its debt levels are something to keep an eye on. As of the end of the first quarter, the trust had $7.3 billion in adjusted debt and an adjusted debt-to-earnings before interest, taxes, depreciation and amortization (EBITDA) ratio of 7 times. It does, however, have $13.1 billion in unencumbered assets and an interest coverage ratio of 3.4 times. That gives it some flexibility to weather headwinds.
More to come
One area of growth is development. Choice Properties continues to expand its mixed-use development projects, adding 97,600 square feet of new space in the last quarter alone. This includes both residential and commercial intensification. It also completed a $33.7 million acquisition in Brampton, with Loblaw again as the tenant. That’s not just growth for growth’s sake; it’s targeted, tenant-backed expansion.
Occupancy remains high, sitting at 97.7% across the portfolio. That figure alone tells a story of resilience. The trust also made some smart moves in its industrial portfolio, where demand remains strong thanks to logistics and e-commerce tenants.
Bottom line
If you’re retired or getting close and want to avoid pushing your income too high, a REIT like this can offer tax-efficient income. Because REIT distributions are often classified differently than typical dividends, these can be more favourable from a tax perspective depending on your income mix.
Choice Properties isn’t going to double overnight. But that’s not the goal. The goal is stability. It’s for retirees who want to protect their OAS, limit tax surprises, and get paid to wait. It won’t shield you from every risk, but the balance of steady tenants, strong occupancy, and modest growth makes the dividend stock a solid candidate for any retirement portfolio built on real income.
