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When markets wobble and talk of recession fills the air, some investors panic. Others get paid. If you’re in the latter camp, SmartCentres REIT (TSX:SRU.UN) deserves your attention. This Canadian real estate investment trust isn’t flashy. But it pays a monthly distribution that currently yields around 7.9%, and it has a strong record of paying that dividend through thick and thin.
Let’s start with what SmartCentres actually does. It owns one of the largest portfolios of commercial real estate in the country, with a focus on retail properties anchored by Walmart. Its holdings span about 35 million square feet. These properties aren’t your typical mall setups—they’re open-air shopping centres with stable tenants in grocery, pharmacy, banking and discount retail. These are the kinds of places people still shop at, even when cutting back elsewhere.
That tenant mix matters in a recession. When spending tightens, consumers pull back on luxury but not on essentials. Walmart is as essential as it gets for many Canadians. It accounts for a substantial share of SmartCentres’s rental income and contributes to the REIT’s high occupancy rate, which is currently around 98.4%. This kind of stability is exactly what you want when the economy is uncertain.
In its most recent earnings report for the first quarter (Q1) of 2025, net rental income came in at $136.8 million, up from $130.7 million in the same quarter last year. FFO per unit was $0.56, up from $0.48, and FFO with adjustments per unit was $0.54, up from $0.52. Those gains are key because they show the REIT is generating enough cash to support its distribution. The FFO payout ratio was 83.8%, and the adjusted FFO payout ratio was 88.1%, both improvements that suggest the dividend is sustainable even under modest stress.
This matters for monthly income seekers. At its current unit price of around $23.50, the annual payout of $1.85 gives you a yield of approximately 7.9%. That income comes in monthly, meaning it can be relied on like a paycheque. On a $10,000 investment, that’s nearly $66 per month. If you’re drawing income in retirement or simply want to supplement your salary, SmartCentres is one of the few REITs on the TSX offering that kind of consistent return.
The trust isn’t sitting still either. It’s diversifying into residential and mixed-use developments through its SmartLiving brand. That includes condos, apartments, self-storage and seniors’ housing. Projects are underway in places like Vaughan, Montreal and Toronto. If executed well, these developments could add value and diversify the income base. But they do introduce a layer of risk, especially if interest rates remain high or the real estate market slows.
Speaking of interest rates, SmartCentres has taken steps to manage that risk. About 90% of its debt is fixed-rate, meaning it won’t face sudden hikes in borrowing costs. Still, higher rates can weigh on unit prices and slow refinancing options in the future. This is something to watch, particularly if central banks keep rates elevated for longer than expected.
Despite those concerns, the trust remains well-positioned for long-term investors. Its core retail operations are resilient. Its balance sheet is relatively healthy. And management appears focused on prudent capital allocation. There’s no guarantee the distribution won’t ever be cut, but current cash flows suggest it’s on solid ground.
In a recession, stock prices might swing and growth may slow, but rent still gets paid. That’s the strength of a REIT like SmartCentres. Its tenants—mostly essential services—keep paying. That money gets passed to unitholders each month. For Canadian investors who value stability and income, that’s a comforting cycle.
So, if you’re looking for a reliable monthly payer that has weathered past storms and looks ready to handle future ones, SmartCentres could be it. With a generous yield and a strong foundation, this 7.9% stock could help you keep calm and collect cash, even through recessions.
