Income-seeking TFSA (Tax-Free Savings Account) investors should consider owning quality dividend stocks that offer an attractive yield. Any income derived from qualified investments in the TFSA is exempt from Canada Revenue Agency taxes.
This makes the registered account apt for income investors who can earn steady dividends and capital gains without paying any taxes for life.
One such monthly dividend stock you can buy and hold in the TFSA is Automotive Properties REIT (TSX:APR.UN), which offers you a forward yield of 7.4% in December 2025.
In the last 10 years, the real estate investment trust has returned 191% to shareholders after adjusting for dividend reinvestments. Let’s see why it remains a top buy for income investors today.
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The bull case for the TSX dividend stock
Automotive Properties REIT is Canada’s only publicly traded REIT focused on consolidating automotive and OEM (original equipment manufacturer) dealership real estate properties.
The REIT operates, owns, and acquires income-producing automotive dealership and service properties across Canada and the United States.
The portfolio consists of 91 commercial properties spanning 3.4 million square feet of gross leasable area across 300 acres. These properties are located in urban centres along major transportation routes with high visibility.
Notably, the properties occupy zones designated explicitly for automotive retail use, making them defensive assets integral to automotive brand distribution networks.
The Canadian automotive retail industry generated approximately $219 billion in 2024, accounting for 27% of Canada’s total retail sales. Moreover, the REIT’s lead tenant is the Dilawri Group, Canada’s largest automotive dealership group, with combined 2024 revenues of approximately $5.1 billion, representing virtually every major automotive brand. Dilawri maintains strategic alignment through its 30.8% effective interest in the REIT.
The portfolio has a weighted-average lease term of 8.8 years as of September 2025. Most leases are triple-net structures where tenants cover maintenance, taxes, insurance, utilities, and non-structural capital improvements. All leases include fixed or CPI-linked (consumer price index) rent escalators, ensuring consistent revenue growth.
The REIT pays monthly distributions of $0.0685 per unit, or $0.822 annualized. Management includes CEO Milton Lamb, with over 25 years of commercial real estate experience, and CFO Andrew Kalra, with over 20 years of finance experience, including 14 years in automotive.
A strong performance in Q3 2025
Automotive Properties REIT delivered solid Q3 results while deploying over $150 million across 11 properties. The REIT completed purchases totaling $93.6 million during the quarter for seven automotive properties, including five dealership and collision centers in Greater Montreal and a Rivian-tenanted facility in Orlando.
An additional four Montreal-area properties closed after quarter-end for $57.3 million, which was the company’s most active expansion period since going public a decade ago.
In Q3, rental revenue rose by 7.9% year over year to $25.4 million. Its net operating income rose 6.5% while same-property net operating income rose 2.3%. Funds from operations per share increased to $0.252, up 8.2% year over year, indicating a payout ratio of 82%.
Debt-to-gross book value stood at approximately 45% as of mid-November, with 84% of debt fixed through interest rate swaps and mortgages at a weighted average rate of 4.4%. Management proactively extended $29 million of floating-to-fixed swaps during the quarter for five-to-six-year terms at rates below 4.6%, limiting interest rate exposure.
The REIT ended Q3 with $7.5 million in cash and $9 million in undrawn credit capacity. Moreover, eight unencumbered properties valued at $117 million provide an additional liquidity cushion.
The growth story for Automotive Properties is far from over, given its entry in the U.S. market and diversification into heavy equipment dealerships.
Given consensus price targets, the TSX stock trades at a 13% discount. If we adjust for dividends, cumulative returns could be closer to 21%.
