Canadian passive-income seekers looking to find a high-yielding dividend stock that deposits cash into their brokerage accounts every single month may wish to check out True North Commercial Real Estate Investment Trust (TSX: TNT.UN), or True North REIT.
After suspending its distributions during a turbulent 2023 for office real estate, this pure-play Canadian office REIT made a major comeback by reinstating its monthly payouts in early 2025. Today, its well-covered payout sports a juicy 8.4% annual dividend yield. But is this high-yield REIT a safe bet for your portfolio in May 2026? Let’s take a closer look.
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True North REIT: The rebirth of a high-yield passive income stream
True North Commercial REIT’s reinstated monthly distribution promises a reliable, well-covered high-yield passive income payout that could help compound investors’ wealth.
The office REIT owns a portfolio of 37 office properties spanning 4.4 million square feet of gross leasable area (GLA) located across five provinces. While it has some notable concentration of 41.6% of its GLA in the Greater Toronto Area (GTA), the trust’s properties are reasonably diversified across Canada, and it has maintained resilient occupancy levels post-pandemic.
Although overall occupancy rates experienced a dip later in the past year, falling from 92% by March 2025 down to 90% by December, the REIT’s core portfolio boasted a stellar 95% occupancy rate as of March 31, 2025, excluding properties held for sale. To optimize its portfolio, True North has disposed of three properties since the first quarter of 2025, including an Ottawa property held for sale that was vacated in the fourth quarter of 2025.
Crucially, the Canadian national office market continues to trend positively, marking two straight years of positive net absorption and ending 2025 with 2.2 million square feet of net absorption nationally. True North is capitalizing on this leasing momentum, renewing and signing leases at average rates 5% above expiring rents during the first quarter, with tenants locking in a long average lease term of 6.9 years.
An unprecedented safety net
When a dividend stock yields over 7%, the first question investors should ask is whether the high-yield passive income payout is reasonably safe. For True North, the answer lies in its jaw-dropping distribution coverage, with its diluted Adjusted Funds From Operations (AFFO) payout rate sitting at an incredibly conservative 38% for the first quarter of 2026. AFFO measures the most recurring distributable cash flow for REITs, after considering property maintenance and leasing costs.
During the first quarter of 2026, the REIT paid out $2.5 million in distributions while generating $7.3 million in adjusted cash flow from operating activities. It had the capacity to pay more than double its current distribution, proving that the payout is exceptionally well covered by rental cash flows. Furthermore, the REIT’s underlying cash flow is backed by institutional-grade tenants: about 74% are either government tenants (36%) or credit-rated corporate tenants (38%), presenting an exceptionally low default risk.
A deeply undervalued real estate investment trading at 32 cents on the dollar
Perhaps the most compelling reason to consider True North REIT is its wildly high discount to net asset value (NAV). As of March 31, 2026, True North units had an NAV of $26.10, yet the same units exchanged hands at around $8.19 in the public stock market at writing.
Deeply undervalued TNT.UN units trade at a staggering 68.6% discount to their fair value, allowing new investors to buy quality real estate at 32 cents to the dollar. Management has also renewed a unit repurchase authorization that allows it to buy back up to 10% of its outstanding equity units at these heavily discounted prices to create long-term value.
Investor takeaway
True North REIT’s 8.4% high yield monthly payout is a compelling offering for passive income purposes. However, the deep discount on units implies above-average risks. The market is skeptical of the office market since the pandemic, and a recovery is not yet convincing as the Canadian economy shrugs off recessionary pressures.
That said, because regulation requires REITs to distribute most of their earnings to unit holders so they can remain income tax-exempt, the high yield distribution remains a core focus. With an 8.4% yield, an ultra-safe payout ratio, and a massive valuation discount, this monthly cash-payer is well worth a look for passive income seekers today.
