The real estate investment trust (REIT) sector is one that I think provides investors with plenty to think about heading into 2026.
For one, these dividend stocks provide incredible yields relative to most stocks in the market. That’s because by law, they’re required to distribute at least 90% of their net operating income to investors every year (mostly quarterly, but sometimes monthly). Thus, from a passive-income perspective, there are few other sectors that are better.
But these stocks also benefit from a declining interest rate environment. That’s just the nature of the real estate sector.
In terms of three companies with the best headwinds heading into next year, here are three of my top picks.
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SmartCentres REIT
A retail-focused REIT I remain very bullish on, SmartCentres REIT (TSX: SRU.UN) continues to provide excellent value, even after its recent moves.
Shares of SmartCentres have surged (everything is relative) to a five-year high of late. That’s despite sentiment that remains sour in this space. E-commerce continues to cut into brick-and-mortar retail, with malls closing down everywhere.
That said, the fact that this is a company anchored by Walmart for most of its locations provides cash flow durability that its peers simply don’t possess. For a company with a unique model and a 7.2% yield, there are few better options in this sector right now in my view.
Dream Industrial REIT
I remain very bullish on industrial real estate, and Dream Industrial REIT (TSX: DIR.UN) continues to be among my top picks in this space.
Why am I so bullish? Well, for REITs like Dream Industrial that have high-quality assets strategically positioned close to city centres, the distribution and warehouse facilities funding the e-commerce growth trends I mentioned above are essentially backed by this REIT. In other words, investing in Dream Industrial is like picking up a slice of the overall industrial revolution underway today.
With an impressive 5.6% dividend yield, and a stock price I think could head much higher from here as this stock gets re-rated higher, this is a no-brainer buy in my view.
Sienna Senior Living
Last, but certainly not least on this list of top Canadian REITs to buy, is Sienna Senior Living (TSX: SIA).
Shares of the senior facility operator have soared of late, as investors have clearly picked up on my underlying thesis around this company.
It’s really simple — demographics. Canadians are aging, and fast. And with fewer children each and every generation, a disproportionate amount of spending is going to take place among the oldest cohorts in our population. That’s a trend that should continue even as Gen X ages into retirement, and so on.
For those looking to invest in such a trend, and a company with robust financials and a 4.5% dividend yield, this is the way to go in my view.
