How Much to Invest in CT REIT for $1,000 a Year in Dividends

CT REIT offers a solid investment with a 5.4% yield. Understand how it compares to other REIT options.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published November 10, 4:00 pm EST

Would you be willing to invest $24,500 to earn $1,000 every year, which grows alongside inflation? What if you could get similar returns for $6,000 less at $18,571? That is the difference between the distributions of two REITs.

Granite REIT (TSX: GRT.UN) pays a 4% annual yield and grows dividends by an average annual rate of 3%. It buys warehouses and storage facilities in five countries and keeps selling lower-yielding properties to buy higher-yielding ones.

CT REIT (TSX: CRT.UN) pays a 5.4% annual yield and grows dividends by an average annual rate of 3%. It buys retail stores from Canadian Tire and leases them back to the retailer. It has a longer lease and 1.5% annual lease appreciation.

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How to earn $1,000 a year in dividends

Both have lower leverage than their peers, which makes the yield safer. However, you can earn a lot more from CT REIT than from Granite REIT for the same investment amount. For instance, to earn $1,000 in annual dividends, you need to buy 1,030 units of CT REIT, which will cost you $18,571 at $18 per unit. To earn the same amount from Granite REIT, you will have to shell out $24,537.

Stock	Stock price	Investment Amount	Number of shares	Dividend per share	Annual Dividend	Monthly Dividend
Granite REIT	$87	$24,537	282	$3.55	$1,001.10	$83.43
CT REIT	$18	$18,571	1030	$0.97	$999.10	$83.26

The above example shows that unit price or dividend per share in dollar terms does not matter. What matters is the yield, the dividend growth rate, and the safety and sustainability of this dividend. Both CT REIT and Granite REIT have safe dividends. However, CT REIT earns rent from retail stores, which have a higher yield.

CT REIT does not sell property as frequently as Granite REIT, saving on brokerage and property transaction costs. Moreover, it has the right of first refusal on any property Canadian Tire wants to buy for its store. Add to it no marketing cost and assured occupancy. All these improve operating efficiency, resulting in a payout ratio of 72.5%. Granite also has a lower payout ratio of 64%, but its dividend yield is also lower than CT REIT’s. Both CT REIT and Granite REIT deserve a spot in your portfolio to diversify risk.

How much to invest in CT REIT for $1,000 a year in dividends

If your target is to earn $1,000 a year in dividends in five years, you can reduce your investment amount. One option is to buy 889 units and let the 3% dividend growth help you reach the $1,000 target by 2031. The five-year wait reduces your initial investment to $16,029.

Purchase price	Investment Amount	Number of shares purchased	Year	Dividend per share	Annual Dividend in 2027
$18	$18,571	1,030	2026	$0.97	$999.10
			2027	$1.00
			2028	$1.03
			2029	$1.06
			2030	$1.09
	$16,029	889	2031	$1.12	$999.68

Another option is to use a dividend reinvestment plan (DRIP). CT REIT DRIP adds a 3% bonus on the reinvested dividend amount and allocates DRIP shares accordingly. If you reinvest your monthly dividends for five years, compounding could help you reduce your investment further.

A $14,000 investment today can buy 778 units. The assumption is that you start earning annual dividends from 2027 onwards, with dividends growing by 3% and the stock price rising by $1 every year.

The 778 units will earn $763.68 in annual dividends, and CT REIT will allot DRIP shares worth $786.59 after adding a 3% bonus on dividends. This reinvestment will help you reach your target in 2031, with a $14,000 investment.

Stock Price	Year	CT REIT DRIP Shares	Total Share Count	CT REIT Annual Dividend Per Share	CT REIT Annual Dividend Income	Dividend Amount After Adding a 3% Bonus
$18.00	2026		778		$0.00	$0.00
$18.00	2027	0.00	778.00	$0.982	$763.68	$786.59
$19.00	2028	41.40	819.40	$1.011	$828.44	$853.30
$20.00	2029	42.66	862.06	$1.041	$897.73	$924.66
$21.00	2030	44.03	906.10	$1.073	$971.89	$1,001.04
$22.00	2031	46	952	$1.105	$1,051.31	$1,082.85