The best investment asset is the one you can comfortably hold in your portfolio for the longest time. For income-focused portfolios, only a handful of Canadian dividend stocks personally inspire the confidence required to buy and hold them for the next seven years without losing sleep.
Why seven years? Because the underlying metrics that drive cash flow stability and dividend longevity indicate that Choice Properties Real Estate Investment Trust (TSX:CHP.UN) is uniquely positioned for that horizon. Yielding 4.8% with a monthly distribution of $0.07 per unit, Choice Properties REIT combines durable monthly income with steady capital growth potential.
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Income secured by long-term contracts
As Canada’s largest REIT by asset count, Choice Properties owns, manages, and develops a massive $18 billion portfolio spanning 563 retail, 124 industrial, and 12 mixed-use properties across 68.6 million square feet of gross leasable area (GLA).
The bedrock of this portfolio is its relationship with its former parent, retail giant Loblaw Companies, which serves as Choice Properties’ anchor tenant and accounts for 57% of its annual rent. Loblaw recently renewed 50 leases covering 3.6 million square feet at an 8.8% positive lease spread. This agreement extends leases due to expire in 2027 by five additional years, effectively securing rental cash flow on those properties for the next six to seven years. Some Loblaw leases extend for 24 years.
Furthermore, Loblaw provides exceptional credit quality. Earlier this year, Morningstar DBRS upgraded Loblaw’s credit rating to A (low) with a positive trend, citing operational stability, strong same-store sales growth, and healthy margins. Rentals from Loblaw are most likely to keep coming every month over the next decade.
While the trust reported a $176.4 million net loss for the second quarter of 2026, income investors can look past this headline accounting figure. The paper loss was largely caused by non-cash fair-value adjustments on exchangeable trust units following a rise in Choice Properties’ unit price.
Fundamentals remain strong: occupancy stood at 97.7% heading into the third quarter, and average leasing spreads for the second quarter reached 19%.
A transformational $9.4 billion deal
Choice Properties is on the verge of expanding its market leadership through a transformational transaction. Partnering with KingSett Capital in a $9.4 billion deal to privatize First Capital REIT (TSX:FCR.UN), Choice Properties will acquire 101 necessity-based retail properties comprising 8 million square feet of GLA for approximately $5 billion.
The acquired portfolio boasts a 98.2% occupancy rate and a 4.3-year weighted average lease term (WALT). Following unitholder approval in June 2026 and court approval from the Ontario Superior Court of Justice on June 25, 2026, the deal is on track to close in the second half of 2026. Management expects the acquisition to boost near-term net operating income (NOI) growth while preserving the trust’s investment-grade balance sheet.
A safe distribution and proven execution
Choice Properties’ 4.8% yield is backed by solid payout metrics. The monthly distribution represented 89.9% of adjusted funds from operations (AFFO) in the second quarter of 2026. Choice Properties has raised its distribution for three consecutive years and has never missed a monthly payout in its 13-year history.
Since 2015, the trust has generated positive same-property NOI growth in every normal operating year, excluding 2020 during the height of the pandemic. Funds from operations (FFO) per unit have grown at an average annual rate of 3% since the pandemic.
The REIT has delivered a 10-year compound annual return of 6.8% and a more respectable five-year total annual return of 7.7%.
According to the Rule of 72, a 7.7% return could double one’s investment in a little over nine years.
The Foolish bottom line
Securing a real estate portfolio with a weighted average lease term approaching or exceeding seven years acts as a defensive shield during uncertain economic cycles. Embedded annual rent step-ups protect against inflation, while the anchor presence of Loblaw and necessity-based retailers insulates against tenant churn.
Given the “promise” for a 4.8% yield that provides a strong base investment return, Choice Properties REIT offers reliable monthly income and steady capital appreciation potential as it integrates First Capital’s assets, deleverages, releases space at higher market rents, and expands its high-density residential footprint.
