If you love the idea of getting paid every single month, a high-quality monthly dividend stock can be the foundation of a reliable passive income stream. One Canadian real estate investment trust (REIT) is quietly crafting a compelling reputation among income investors. Plaza Retail Real Estate Investment Trust (TSX: PLZ.UN) pays a 6.3% distribution yield and, crucially, it hands you cash every month.
Let’s dig into what makes this monthly dividend stock worth a closer look, and whether that payout is built to last.
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Plaza Retail REIT: A portfolio built for everyday resilience
Plaza Retail REIT owns 190 properties totalling 8.8 million square feet of gross leasable area. With a 27-year history of accretive acquisitions, redevelopments, and developments, the trust has steadily compounded its net asset value over time.
What really sets it apart, however, is what it owns – and what it doesn’t. Only a tiny handful of its assets (three out of 190) are enclosed malls, a property type that continues to struggle with higher vacancies post-pandemic. Instead, a full 93.9% of Plaza’s portfolio is open-air retail centres. These plazas are anchored by national tenants serving essential, value, and convenience needs. This focus means the rental cash flows tend to be remarkably stable, even when the economy wobbles.
Demand for space in these centres remains strong across Canada, even against a backdrop of post-tariff uncertainty. As of the first quarter of 2026, portfolio occupancy sat at 97.5%. Strip out the three enclosed malls and that figure jumps to a near-perfect 99%. With a weighted average lease term of 5.4 years, the REIT also enjoys half a decade of visible, contracted rental cash flow.
Rent growth powering cash flow higher
Plaza Retail REIT is collecting bigger rent cheques in 2026. Releasing spreads hit 13.4% in the first quarter, meaning existing tenants are renewing at meaningfully higher rates. New leases closed at rates 76.1% above previous rents, a clear sign of robust market demand.
That pricing power is flowing through to the bottom line. Funds from operations (FFO) jumped 11.7% year over year during the first quarter, supported by higher net operating income, new acquisitions, and property intensifications. Revenue was up 4.4% and net operating income rose 2.5%. When you see that kind of broad-based growth, it’s a healthy signal for any monthly dividend stock.
Can the 6.3% monthly dividend hold?
This is the million-dollar question for income-oriented investors. The first-quarter FFO payout ratio improved sharply to 71.6% from 80% a year ago, giving management a comfortable cushion on that front.
However, the adjusted funds from operations (AFFO) payout ratio remained elevated at 94.3%, essentially flat from 94.2% a year earlier.
That’s not a red flag on its own – leasing activity and maintenance capital expenditures were unusually high in the quarter as the trust invested in asset quality. Still, prudent investors will want to watch that number. If it drifts lower as projects complete and capital spending normalizes, the distribution will look even safer.
Encouragingly, growth catalysts are already in motion. Plaza Retail REIT expects to complete expansions on two fully leased properties this year, and three more projects are set to finish construction in the second quarter of 2026 – two of which are already fully leased. That’s nearly guaranteed incremental cash flow.
A hidden tax advantage for unregistered accounts
Canadian REIT distributions are generally taxed as ordinary income, which is why many investors stash them inside a TFSA.
But Plaza offers an unusual perk if your registered accounts are already maxed out. The trust’s distribution is usually composed of significant return of capital (ROC) and capital gains (CG) components that reduce taxable income.
ROC isn’t taxed immediately; instead, it reduces your adjusted cost base, deferring tax until you sell. The capital gains portion gets the preferred tax treatment you’d expect.
So in a taxable account, a meaningful slice of that 6.3% yield comes with a lighter tax bite than the headline number would suggest.
Of course, holding Plaza inside a TFSA still wipes out all the cost-base tracking headaches entirely, but it’s refreshing to find a monthly dividend stock that doesn’t punish you in an unregistered account.
