A monthly distribution is lovely until the business starts needing that money back. For a Tax-Free Savings Account (TFSA), I’d pay attention to what a landlord keeps after paying investors, along with what lands in the account. Two familiar Canadian retail-property owners offer a useful choice here. One delivers more income immediately. The other leaves more space behind its payout, which is where my next purchase would lean.
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CRT
CT REIT (TSX: CRT.UN) owns retail and industrial properties, with Canadian Tire at the centre of its tenant base. The connection supplies long leases, planned rent increases, and opportunities to expand properties alongside an established retailer. Investors collect rent without replacing leaky taps themselves.
Its second-quarter committed occupancy was 99.5%. The distribution used 72.7% of adjusted funds from operations (AFFO), which adjusts property earnings for items including maintenance spending. That shows a nearly full portfolio retaining cash after distributions.
I’d value that retained cash because buildings need investment and debt eventually needs refinancing. It can help fund growth without sending every available dollar straight out the door. The main weakness is concentration. Canadian Tire’s fortunes shape this landlord’s income to a degree that owning properties in several provinces doesn’t solve.
SRU
SmartCentres REIT (TSX: SRU.UN) owns shopping centres with a strong Walmart connection, alongside development land and mixed-use projects. Its appeal combines established retail rent with the chance to make more of well-located sites. Apartments, storage, and other projects can eventually add income beyond the existing shopping centres.
The second-quarter in-place and committed occupancy rate was 98.1%, giving the rental business a solid base. Its AFFO payout ratio for the quarter was 86.7%, leaving a smaller cushion than CT REIT’s. The trusts calculate their measures differently, but the gap still makes me more comfortable with CT REIT for a spending-focused account.
SmartCentres is leasing space and advancing projects, so the higher payment isn’t its only attraction. Development can create value, although construction costs, financing, and slow condo sales can delay the benefit. I’d want existing rent to carry the distribution while new projects develop.
Compare the same $10,000
Using recent closing prices, here’s what two alternative $10,000 purchases buy before fees. Annual income assumes 12 payments at the latest declared monthly rate. SmartCentres’ $0.15417 monthly payment annualizes to $1.85004, shown without rounding so the payout calculation stays consistent.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| CRT.UN | $17.51 | 571 | $0.9816 | $560.49 | Monthly | $9,998.21 |
| SRU.UN | $27.34 | 365 | $1.85004 | $675.26 | Monthly | $9,979.10 |
CT REIT produces about $46.71 monthly, against SmartCentres’ $56.27. SmartCentres therefore adds roughly $114.77 annually on the same budget, while leaving $20.90 uninvested against CT REIT’s $1.79. Their indicated yields are about 5.6% and 6.8%, respectively.
I’d give up that extra $9.56 a month for CT REIT’s larger payout cushion. That’s a specific price for my preference, and a manageable one for an investor prioritizing income durability. Someone accepting greater payout and development pressure could prefer SmartCentres for higher starting income.
Holding either inside a TFSA generally shelters the distributions and future gains from Canadian tax. A new $10,000 deposit requires sufficient personal room, including any unused room carried forward. Investment growth itself doesn’t use new room. The tax shelter helps the return you earn, while the business still determines whether there’s a return to shelter.
Bottom line
I’d keep either trust as part of a broader collection of businesses. Retail-property exposure and interest-rate sensitivity remain even when tenants are paying on time, so monthly income investing works better when one landlord doesn’t carry the whole household budget.
I’d choose CT REIT for the next TFSA income purchase. Its retained cash gives future rent growth more room to strengthen the business and support distributions. Reinvesting those payments while adding other sectors can build a more flexible income stream before retirement spending begins.
