When it comes to finding high-quality TSX stocks that can earn you both compelling and reliable income, a high-quality Canadian REIT might be one of your best bets.
It’s no secret that real estate has always been one of the most reliable ways to build long-term wealth. It’s an asset class that grows steadily, produces consistent income, and has historically held its value through almost every type of market environment.
The problem for many investors, though, is that owning physical property isn’t always practical. It requires large upfront capital, ongoing maintenance, active management, and often a significant amount of leverage.
That’s why REITs, which you can buy in registered accounts like your TFSA or RRSP, have become one of the most accessible and effective ways for Canadians to gain exposure to the high-potential real estate sector, but without any of the hassle.
In fact, REITs are not only more accessible for Canadians; they often offer a tonne of advantages. For example, REITs give you instant exposure to high-quality and diversified portfolios of income-producing properties, whether that’s industrial warehouses, residential buildings, retail centres, or office complexes.
Furthermore, because these portfolios are so large and diversified, and because their occupancy rates often stay above 95%, REITs typically generate predictable cash flow, which they then distribute most of to unitholders. And when you own these high-quality REITs for the long haul, you also gain exposure to the property appreciation over time.
Additionally, because many Canadian REITs operate in essential parts of the economy, such as residential, logistics or necessity-based retail, their earnings can remain surprisingly resilient even when uncertainty picks up in the economy.
So, if you’re looking for a reliable passive income generator to buy now, here’s why Granite REIT (TSX:GRT.UN) might be the safest dividend stock on the TSX.
Why is Granite one of the safest Canadian REITs on the TSX?
Often, investors view residential REITs as the most defensive and reliable stocks you can buy in the real estate space. And while that makes sense since housing is essential, Granite has proven time and again it’s equally as resilient.
Granite owns assets like warehouses, industrial properties, and distribution centres. That might seem like a boring business, but it’s actually an industry that’s seen incredible growth in recent years and continues to have significant long-term potential.
As e-commerce continues to grow in popularity and retail real estate continues to face pressure, companies are increasingly needing warehouse and storage space to store their products.
Not only is more warehouse space needed as businesses close down brick-and-mortar locations, but often the distribution centres can improve the economics of those businesses, which is why stocks like Granite continue to see increased demand for its properties.
This jump in demand has allowed Granite to grow its operations revenue even faster, leading to a significant increase in profitability.
The real reason why Granite looks like one of the safest dividend stocks you can buy on the TSX, though, is that over the past five years, as it has been consistently increasing its dividend payments, its payout ratio has actually been falling significantly.
For example, in just the last five years Granite’s annual dividend increased from $2.80 to $3.30, a jump of roughly 18% over that stretch. Yet at the same time, its payout ratio of adjusted funds from operations (AFFO) declined from 81% to 68% over that stretch.
Furthermore, Granite already announced another 4.4% increase to its dividend scheduled for 2026.
So, if you’re looking for a high-quality and reliable dividend stock to buy now and hold for years, Granite and its 4.5% dividend yield is easily one of the best Canadian REITs to consider.
