2 Canadian REITs Yielding at Least 5.5% – but Check These Key Factors Before You Buy

Yield can grab attention fast, but Canadian investors should check a few things before buying any real estate investment trust (REIT). First, look at whether the distribution is covered by funds from operations or adjusted funds from operations, not just headline earnings. Then check occupancy, debt levels, lease quality, and what kind of properties the REIT actually owns.

A high yield can look great right up until weak office exposure, falling rents, or too much leverage starts to squeeze it. That’s why the better question is not just “What does it yield?” but “How safe does that yield look?”

HR

H&R REIT (TSX:HR.UN) fits as it offers a solid yield, but it also shows why investors need to read past the surface. H&R owns a mix of residential, industrial, retail, and office properties, and over the last few years it has pushed hard to reshape the portfolio. By the end of 2025, residential and industrial assets made up 84% of its real estate exposure, excluding assets held for sale. It also kept selling assets into 2026 and continued shifting away from older parts of the portfolio.

The numbers look fairly steady. H&R’s investor materials showed a current annual distribution of $0.60 per unit and an approximate yield of 5.7%. In 2025, same-property net operating income (NOI) on a cash basis rose 1.6%, occupancy sat at 93.1%, funds from operations (FFO) per unit came in at $1.20, and AFFO per unit reached $0.995.

Its payout ratio as a percentage of AFFO was 60.3%, which gives the distribution more breathing room than the headline payout ratio as some quote pages suggest. Net asset value (NAV) per unit was $16.09, well above where the units have recently traded, so value investors may see room there. The main thing to watch is execution. Industrial occupancy was weaker, and H&R still has office exposure, even if it has been shrinking it.

BTB

BTB REIT (TSX:BTB.UN) is the higher-yield name here, and it comes with the bigger “look closely” label. BTB owns industrial, suburban office, and necessity-based retail properties across Canada, so it’s not a pure-play industrial or residential REIT. Over the last year, it leaned on leasing work, property sales, and tighter financial discipline to keep the story moving. Management highlighted strong lease renewal spreads, said two vacant industrial properties weighed on year-end occupancy, and expressed confidence those spaces would be leased in 2026. That mix makes BTB attractive for income hunters, but it also means investors need to stay alert to portfolio quality.

BTB’s yield looks juicy. The dividend stock holds a forward dividend yield around 7.6%. In 2025, rental revenue was $130.1 million, NOI held steady at $75.1 million, cash same-property NOI rose 2%, and AFFO adjusted per unit improved to $0.388 from $0.381. Even better, the AFFO adjusted payout ratio fell to 77.3% from 78.7%, which suggests the monthly distribution still has support.

Total debt ratio also improved to 57% from 57.9%. Still, occupancy ended 2025 at 91.3%, and some of the recent softness came from industrial vacancies and office-related pressure. That’s not a deal breaker, but it is exactly the kind of thing yield investors should monitor.

Bottom line

So yes, these two Canadian REITs yield at least 5.5%, and BTB clears that bar by a wide margin. But the real takeaway is that yield alone is never enough. H&R looks more conservative, with a stronger payout profile and a portfolio that has become more focused. BTB offers more income, but also asks investors to accept a bit more risk around occupancy and portfolio mix. And both can offer immense income even with $7,000 in each.

For Canadian income investors, that is the trade-off worth checking before hitting buy.