With economic uncertainty and persistent inflation weighing on household finances, building a reliable stream of passive income has become increasingly important. Passive income can provide greater financial stability while helping offset the impact of rising living costs. Among the many income-generating strategies available, investing in monthly dividend stocks is a simple, cost-effective way to earn consistent cash flow.
Real estate investment trusts (REITs) are particularly attractive for income-focused investors because they are mandated to distribute a significant portion of their taxable income to unitholders. As a result, many REITs offer dependable monthly distributions at attractive yields. With that in mind, let’s examine the business outlook, financial performance, distribution history, and long-term growth prospects of CT Real Estate Investment Trust (TSX:CRT.UN), which currently offers a compelling 5.26% distribution yield, to see why it stands out as a solid passive-income investment.
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CT REIT’s business outlook
CT REIT owns a portfolio of 378 predominantly retail properties comprising approximately 31.8 million square feet of gross leasable area. The REIT benefits from a high-quality tenant base, with Canadian Tire leasing about 29.2 million square feet, or 92.1% of its portfolio. It has also secured long-term leases with a weighted-average remaining lease term of seven years. Supported by its defensive, retail-focused portfolio and long-standing relationship with Canadian Tire, CT REIT has consistently maintained exceptionally high occupancy levels, with 99.4% at the end of the first quarter.
The REIT also operates with a highly efficient cost structure, as general and administrative (G&A) expenses accounted for just 2.5% of revenue in the first quarter. Its internalized property management platform, cost-recovery service agreements with Canadian Tire, and strategic insourcing of certain functions continue to enhance operating efficiency and support profitability.
The REIT delivered another quarter of solid financial results. Property revenue rose 4.8% year over year to $157.6 million in the first quarter, while net operating income (NOI) increased 4.7% to $124.3 million, supported by acquisitions, development and intensification projects, contractual rent escalations, and strong occupancy. Funds from operations (FFO) climbed 4.2% to $84.5 million. Although higher interest expense and the absence of development fee revenue recognized in the prior year weighed on results, adjusted funds from operations (AFFO) increased 3.6% to $78.1 million, with AFFO per unit rising 2.8% to $0.327.
Supported by its resilient cash flows and consistent financial performance, CT REIT recently raised its monthly distribution by 3.5% to $0.0818 per unit, resulting in an attractive forward distribution yield of approximately 5.26%. The REIT also ended the quarter with $436 million in available liquidity, providing ample financial flexibility to support future acquisitions and development projects.
With its strong operating foundation in place, let’s now examine CT REIT’s long-term growth prospects.
CT REIT’s growth prospects
Rising demand for retail space in Canada, supported by economic growth and limited new supply due to elevated construction costs, continues to create a favourable operating environment for CT REIT. The REIT has a robust development pipeline totalling 629,000 square feet, representing nearly $380 million in planned investments. As these projects are completed and leased, they should expand its income-producing asset base, supporting steady growth in revenue and cash flows.
In addition to its development pipeline, CT REIT stands to benefit from contractual rent escalations embedded in many of its leases, providing a predictable source of organic revenue growth while helping offset inflationary pressures. The REIT has also strengthened its financial position by reducing its net debt-to-EBITFV (earnings before interest and other financing costs, taxes, and fair value adjustments) ratio to 6.5 at the end of the first quarter. Combined, these strengths should support resilient financial performance and enhance CT REIT’s ability to maintain and steadily grow its monthly distributions over the long term.
Investors’ takeaway
Backed by resilient financial performance and stable cash flows, CT REIT has consistently rewarded unitholders, raising its monthly distribution 10 times since 2017, resulting in a cumulative increase of approximately 40.2%.
Notably, these increases in distribution have been accompanied by improved payout sustainability. The REIT’s adjusted AFFO payout ratio has declined from 76.2% in 2017 to 72.5% in the first quarter of 2026, reflecting stronger cash flow generation and prudent capital management.
With its high-quality tenant base, exceptionally high occupancy, disciplined financial management, proven distribution growth, and attractive long-term expansion opportunities, CT REIT is well positioned to continue delivering reliable, growing passive income, making it a compelling choice for long-term income-focused investors.
