Most of us can delay buying a new car, postpone a vacation, or cut back on discretionary spending. But housing is different. No matter what is happening in the economy, we still need a place to live, which is one reason the residential real estate sector has long been considered a popular long-term investment.
In the Canadian real estate space, Canadian Apartment Properties Real Estate Investment Trust (TSX:CAR.UN), better known as CAPREIT, looks like a stock worth watching. The stock has fallen sharply over the last year, but the real estate investment trust (REIT) still owns a large rental housing portfolio with healthy performance and continues to pay monthly dividends.
Let me explain why this Canadian dividend stock looks attractive after its recent pullback.
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CAPREIT stock looks cheaper after the drop
At its core, CAPREIT is a large residential landlord with a portfolio of roughly 45,400 apartment and townhouse units across Canada and the Netherlands. Its business is built around rental income, occupancy management, rent growth, and careful portfolio recycling.
CAPREIT stock currently trades at $34.60 per share, giving the trust a market cap of about $5.3 billion. Its shares have fallen about 21% over the last year and sit 25.3% below their 52-week high. That weakness has pushed its annualized dividend yield to 4.5%, which is paid on a monthly basis.
A falling unit price alone does not make a stock cheap. What makes CAPREIT more interesting is that the selloff has happened while the trust still owns a large portfolio of necessity-based rental assets. Canadians still need housing, and that helps give the business a more defensive base than many cyclical real estate categories.
The monthly payout also gives patient investors something tangible while they wait. That matters when a recovery may take time rather than arrive all at once.
The rental business still has support
The trust’s first-quarter results were mixed, but not broken. CAPREIT posted a net loss of $182.5 million for the quarter, largely due to fair value adjustments and dispositions. However, its diluted funds from operations (FFO) rose 1.7% year over year (YoY) to $0.595 per share.
On the brighter side, the REIT’s Same-property net operating income (NOI) for the residential portfolio rose 2% YoY, helped by a 2.9% rise in occupied average monthly rent (AMR). Occupancy slipped slightly to 97.1%, but the same-property NOI margin improved to 62.2%, showing that its core rental business is still producing steady cash flow.
That is the part most long-term investors should focus on. Real estate values may move around from quarter to quarter, but rent collection, occupancy, NOI margins, and FFO per share tell a clearer story about whether the underlying business could keep supporting dividends.
Why this monthly dividend stock is worth buying on the dip
Meanwhile, CAPREIT has also been reshaping its portfolio. In the first quarter, it sold one residential property in Charlottetown and three properties in the Netherlands for gross proceeds of $101.4 million. It also completed the acquisition of European Residential Real Estate Investment Trust for $98.7 million.
These moves give its management more control over how and when to simplify the REIT’s European portfolio while directing capital toward areas it believes can create better long-term returns. That patience could be valuable when property markets are not rewarding every real estate stock equally.
Given all these positive factors, the recent pullback in CAPREIT stock looks like a chance for long-term investors to collect monthly income while waiting for sentiment to improve.
