Even in uncertain markets, some evergreen investments like real estate rarely lose relevance. Demand for housing doesn’t simply disappear, which is why many investors turn to real estate investment trusts (REITs) for stable income and long-term stability.
Reliable REITs can allow you to benefit from rental income without dealing with the headaches of owning and managing property directly. But what happens when a REIT sees its stock price drop? Is it a warning sign or an opportunity?
In this article, I’ll highlight a top TSX monthly dividend stock from the real estate sector and explain why I still consider it worth owning.
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A closer look at CAPREIT’s recent dip
In the world of residential real estate, scale and stability often go hand in hand — and a few stocks have built a reputation around both. Canadian Apartment Properties Real Estate Investment Trust (TSX:CAR.UN), commonly known as CAPREIT, is one of those established players, with a vast portfolio spanning thousands of suites across Canada and Europe. It manages a large portfolio of around 45,500 suites and townhomes across Canada and the Netherlands.
Currently, its stock trades at $36.78 per unit and offers a 4.8% annualized dividend yield, with monthly payouts.
Notably, CAPREIT’s stock has fallen nearly 20% from its 52-week high. At first glance, that drop can make investors cautious. However, short-term price movements don’t always reflect the underlying strength of a business. Much of the recent weakness can be tied to broader market volatility rather than company-specific issues. This is important because it suggests the decline may not be driven by weakening fundamentals.
A stable approach to growth and cash flow
CAPREIT’s latest results can offer you a clearer view of how the business is holding up. In 2025, the REIT’s diluted funds from operations (FFO) stood at $2.541 per unit compared to $2.534 per unit in 2024. This shows the trust is still generating stable cash flow despite a changing market environment.
Its income story also remains intact as CAPREIT increased its annual distribution to $1.546 per unit, while maintaining a reasonable payout ratio of about 60.8%. For income-focused investors, that consistency still matters.
At first glance, its declining total revenue and net operating income (NOI) might look concerning. However, it’s important to understand that those declines were largely driven by CAPREIT’s repositioning strategy. The trust completed about $2 billion in transactions during the year, including $658.6 million in acquisitions and roughly $1.2 billion in dispositions. In short, CAPREIT has been trimming non-core assets to focus on stronger, higher-yielding properties.
On the brighter side, the REIT’s same-property NOI grew 4.7% in 2025, and margins improved to 64.7%. That suggests the properties CAPREIT continues to hold are becoming more efficient with the help of rent growth and better cost control.
This strategy could shape its future
Interestingly, CAPREIT’s strategy is now more about focus than expansion. By selling lower-priority assets and reinvesting in Canadian properties, the trust is aiming to build a more resilient and efficient portfolio.
However, it’s still growing selectively. In 2025, it acquired 15 Canadian properties with nearly 1,900 suites, while exiting thousands of units elsewhere. This balance between acquisitions and dispositions highlights a disciplined approach to capital allocation.
Foolish bottom line
While a 20% drop in its share price can create doubt, CAPREIT’s fundamentals still look balanced. The trust continues to generate steady cash flow, maintain strong occupancy in Canada, and improve performance at the property level.
While portfolio changes may create short-term noise, its long-term strategy remains clear. For investors willing to look past short-term volatility, CAPREIT could still be a stable dividend stock with long-term growth potential.
