Monthly dividend stocks offer a distinct advantage for income investors. Instead of waiting for quarterly payouts, you receive 12 cheques a year. This frequency aligns perfectly with monthly bills and allows for faster compounding if you reinvest the dividend proceeds.
If you are looking to secure a reliable passive income stream in 2026, Automotive Properties Real Estate Investment Trust (TSX:APR.UN) is a standout candidate. This unique Canadian REIT offers a high yield of 7.2% and recently demonstrated the financial strength to grow its payout.
Automotive Properties REIT: A unique landlord for your income portfolio
While most Canadian Real Estate Investment Trusts (REITs) focus on apartments, offices, or shopping centres, Automotive Properties REIT does something different. It owns a portfolio of 91 income-producing commercial properties comprising automotive dealerships and repair centres.
The automotive retail industry is highly fragmented. Many dealerships are family-owned businesses sitting on valuable land. As these owners look to consolidate or free up capital, Automotive Properties REIT steps in as a specialized landlord.
This niche strategy has proven resilient. The REIT’s properties are essential to the operations of its tenants who can’t sell cars or service vehicles purely online. The physical real estate is critical. This dependency supports high occupancy rates and reliable rent collection.
Strong financial performance
The REIT’s most recent third-quarter 2025 results show a business in a strong growth mode. Rental revenue increased by 7.9% compared to the same period last year. This growth was driven by rent escalations and new acquisitions.
Growth could accelerate in 2026 following the acquisition of 15 more properties during the past 12 months. The REIT has aggressively grown its portfolio from 29 properties comprising 1.1 million square feet of gross leasable area (GLA) by January 2016 to 91 properties comprising 3.4 million square feet of GLA going into 2026.
More importantly, the REIT is becoming more profitable for its unitholders as the portfolio grows. Its Adjusted Funds From Operations (AFFO), a key metric for REIT distributable cash flow, increased 8.8% during the most recent quarter. This growth outpaced the dividend payment, improving the AFFO payout ratio to a healthy 81%, down from 86.3% a year prior. A lower payout ratio means the distribution is safer and leaves more cash retained for future growth or distribution increases.
Buy this REIT for growing monthly passive income
Investors often worry that high-yield dividend stocks may not grow their payouts. Automotive Properties REIT defied that trend in August 2025 by raising its distribution by 2.2%.
The REIT now pays a monthly distribution of $0.0685 per unit, or $0.822 annually. With the stock trading around $11.40, that translates to a generous 7.2% yield for 2026 and beyond.
Using the Rule of 72, a 7.2% yield reinvested continuously could theoretically double your capital in roughly 10 years, assuming the stock price remains stable. Of course, if the REIT’s units appreciate, your total returns could be even higher.
Managing the risks
REITs are sensitive to interest rates, as higher rates make borrowing more expensive. However, management has been proactive, even as rates decline. As of late 2025, approximately 84% of the REIT’s debt was fixed, with a weighted average interest rate of 4.4%. This insulates the balance sheet from immediate volatility in the bond market – should there be any.
Investors should also note that the Dilawri Group is both the REIT’s largest tenant and largest unitholder. While this concentration could be seen as a risk, it also aligns the tenant’s interests with those of the shareholders. The group participated in a private placement in late 2025, supporting the trust’s accretive acquisitions-led growth plans. You could be a richly rewarded co-investor with this strategic investor, and earn high-yield monthly passive income from the REIT while watching its growth plan unfold in the United States.
The Foolish bottom line
Automotive Properties REIT offers a compelling mix of high dividend income, niche market dominance, and improving financial safety metrics. Investors seeking a steady stream of monthly passive income to fund their lifestyle or reinvest for the future should give this 7.2% yielder a closer look.
