Timeliness and reliability are critical, required and desirable factors and attributes when selecting the dividend stocks to buy for passive income. While many Canadian stocks pay dividends on a quarterly basis, there’s something uniquely satisfying about a monthly paycheque. Investors looking to smooth out their cash flow and build resilient income-generating portfolios may check out RioCan Real Estate Investment Trust (TSX: REI.UN) as it transforms into a go-to monthly dividend stock.
Following its first-quarter (Q1 2026) earnings release on May 4, RioCan REIT’s appeal as an income stock to buy has only grown stronger. The Canadian retail REIT offers a combination of a 5.3% distribution yield and strong operational fundamentals while trading at an 11% discount to its most recent net asset value (NAV) of $24.42 per unit. Here’s why REI.UN should be on your radar right now.
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RioCan REIT: A timely monthly income machine
Most bills arrive monthly, so it only makes sense that your income should, too. One of the most attractive features for RioCan REIT investors is the sheer predictability of its monthly distributions. Every single month, typically between the 6th and 8th, RioCan pays out an income distribution to its investors.
Currently yielding approximately 5.3%, RioCan offers a monthly payout high enough to move the needle for your passive-income goals, but conservative enough to be backed by actual earnings rather than debt.
The trust’s distributions during the first quarter comprised 70% of its funds from operations (FFO) per unit. Disregarding otherwise volatile residential property sales, a core FFO payout rate at 74.8% still leaves the distribution in safe territory. Compared to some REIT peers with FFO payout rates in the 85% to 90% range, RioCan’s manageable payout rate leaves some margin of safety to the payout.
The trust has ample breathing room to maintain its dividend while still reinvesting in its massive development pipeline.
A Canadian REIT riding a “leasing supercycle”
The headline story from RioCan’s latest earnings results is the incredible strength of its core retail properties portfolio. RioCan’s retail spaces are more in demand than ever. The REIT reported a staggering 98.6% occupancy rate going into the second quarter of 2026. It signed new leases at rates 58.5% higher than expiring rents during the past quarter. Its high-quality, grocery-anchored retail in urban markets is essentially “irreplaceable” real estate.
RioCan capitalized on a “leasing supercycle,” achieving blended leasing spreads of 25.8%. Essentially, when old leases expired, RioCan was able to sign new ones at significantly higher rates.
What’s even more encouraging for future rental income growth is the REIT’s current average net rent per square foot, which sits at a relatively modest $23.49. Compared to current market rates in major urban hubs where rates exceed $30 per square foot, there is still plenty of embedded growth left in the portfolio as older leases continue to roll over to market rates.
RioCan has 1.7 million square feet in expiring leases due for re-leasing during the remaining three quarters of 2026. Double-digit leasing spreads may help grow recurring operating income.
Growth where it counts: RioCan’s rising operating income
While total revenue figures may be skewed by ongoing non-core asset sales (part of RioCan’s savvy capital recycling program), Same Property Net Operating Income (SPNOI) continues to tell a bullish story about the core business. RioCan delivered robust 4.7% SPNOI growth last quarter.
Operating income growth improves distribution safety, and shows the resiliency in the retail REIT’s core portfolio as it organically improves in profitability and cash earnings generating capacity.
The Foolish bottom line
RioCan REIT’s COVID-19-era strategic reset in 2021 is proving successful as the trust recycles capital and improves its portfolio quality while repurchasing its undervalued units. By focusing on transit-oriented, high-density urban areas, management has built a real estate portfolio that thrives even when the broader economy is shaken.
With its 5.3% distribution yield, a recent credit outlook upgrade, and a “leasing supercycle” that’s driving double-digit rent hikes on new signings, RioCan REIT could be a good monthly dividend stock to buy for those who value consistency. If you want a distribution that hits your account between the 6th and 8th of every month like clockwork, it’s time to take a closer look at this Canadian retail king.
