Dividend investing has been gaining ground as interest rate cuts have made Guaranteed Investment Certificates (GICs) less attractive. Between a 3% interest from a five-year non-redeemable GIC and a 7% annual yield real estate investment trust (REIT) unit that you can sell anytime, the latter offers a better risk-reward ratio. If you are looking to invest $20,000 and earn a regular monthly income, dividend stocks, especially REITs, are a better option.
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REITs are a good monthly passive-income source
A dividend stock is an equity, a risky asset class, as the company is under no obligation to pay dividends. How much dividends to pay is at the management’s discretion and the company’s free cash flow.
Among dividend stocks, REITs are a better option as they enjoy the status of a trust.
Trusts are exempt from tax provided they distribute most of their income to unitholders. If they retain income, they face a very high tax rate. Thus, the weightage of management discretion is low in REITs, and that of funds from operations is high.
Since REITs earn rent monthly and cannot retain income, they give monthly dividends.
This dividend stock gives a 7% yield
Canada has a strong real estate market with some established REITs across commercial, residential, retail, industrial, and hospital sectors. Retail has so far been a sector that attracts a higher rental income. SmartCentres REIT (TSX: SRU.UN) is Canada’s largest retail REIT with 196 properties at key intersections across Canada.
The REIT is the landlord for Walmart, a recession-proof company. Walmart stores attract footfall. Hence, many retailers open their stores near Walmart. Earning 25% rent from Walmart is SmartCentres’s biggest strength that has helped it survive the 2008 Global Financial Crisis and the 2020 pandemic without a distribution cut.
The REIT undertook intensification projects and built offices, warehouses, and residences near its retail properties, enhancing the value of its rental properties. It has a payout ratio of 84.3% as of June 2025, giving it flexibility to pay and grow dividends.
Invest $20,000 in this dividend stock for $118 in monthly passive income
When it comes to investing $20,000 in a single stock, you would prefer a lower-risk, resilient stock, and SmartCentres ticks both boxes. Moreover, there is also potential for the invested amount to grow when property prices recover. SmartCentres’s unit price is derived from the net asset value of its property portfolio.
You can consider investing $20,000 in SmartCentres and get 767 units at a price of $26.05 per unit. The REIT gives a monthly distribution of $0.15417, which converts to $118 for 767 units.
If you buy the REIT units today, you can start earning $118 in passive income from next month onwards. Such instant returns make it a good last-minute investment where you need liquidity without compromising on returns. SmartCentres also increases dividends in a market upturn.
| Year | Dividend per Share | Dividend Growth |
| 2020 | $1.8500 | 2.1% |
| 2019 | $1.8125 | 2.8% |
| 2018 | $1.7625 | 2.9% |
| 2017 | $1.7125 | 3.0% |
| 2016 | $1.6625 | 3.1% |
| 2015 | $1.6131 | 3.3% |
It has not grown dividends since 2020, but it grew dividends annually by 2-3% between 2015 and 2020, when the real estate market was booming. The REIT can give you the upside of equity in a bull market and the resilience of fixed income in a bear market.
Ways to maximize monthly passive income
Instead of waiting for SmartCentre to grow its dividend, you can reinvest the $118 amount every month in other dividend stocks with a high dividend growth rate and optimize your passive-income portfolio. You can consider investing through the Tax-Free Savings Account, where all withdrawals from investment income are tax-free.
Choosing the right stock and how you invest in it can turn losses into profits.
