Advertisement
Canada markets close in 4 hours 40 minutes
  • S&P/TSX

    21,492.86
    -146.24 (-0.68%)
     
  • S&P 500

    5,441.58
    +9.98 (+0.18%)
     
  • DOW

    38,630.76
    +41.60 (+0.11%)
     
  • CAD/USD

    0.7271
    -0.0013 (-0.18%)
     
  • CRUDE OIL

    79.48
    +1.03 (+1.31%)
     
  • Bitcoin CAD

    89,944.25
    -1,624.74 (-1.77%)
     
  • CMC Crypto 200

    1,374.41
    -13.75 (-0.99%)
     
  • GOLD FUTURES

    2,338.20
    -10.90 (-0.46%)
     
  • RUSSELL 2000

    1,995.25
    -10.91 (-0.54%)
     
  • 10-Yr Bond

    4.2830
    +0.0700 (+1.66%)
     
  • NASDAQ

    17,719.45
    +30.57 (+0.17%)
     
  • VOLATILITY

    12.80
    +0.14 (+1.11%)
     
  • FTSE

    8,145.70
    -1.16 (-0.01%)
     
  • NIKKEI 225

    38,102.44
    -712.12 (-1.83%)
     
  • CAD/EUR

    0.6778
    -0.0020 (-0.29%)
     

2 REITs to Buy to Earn Like a Lazy Landlord

Image source: Getty Images
Image source: Getty Images

Written by Adam Othman at The Motley Fool Canada

Buying a rental property is one of the most common passive income generation methods worldwide. However, it’s not as passive as it seems because a landlord has to either take care of the property or pay someone to do that (which cuts into their profits). A far more passive and effortless way of making money from the real estate market is to invest in real estate investment trusts (REITs).

These are publicly traded companies that own and operate income-producing properties and are required to pass on most of their rental income to their investors. However, there are other benefits of gaining exposure to the real estate market via these REITs, like access to property types and locations that you might never be able to afford directly.

A multi-residential REIT

InterRent REIT (TSX:IIP.UN) is an Ottawa-based REIT with a sizable portfolio of income-producing apartment buildings. It has an impressive presence in multiple local markets — over 13,907 residential suites in 126 communities. There are thousands of new residential suites in the development pipeline, so the portfolio might grow considerably in the future. The REIT boasts an impressive occupancy rate of 97%.

ADVERTISEMENT

When it comes to its income-generation potential and, by extension, its yield, InterRent is not quite as impressive as many other REITs operating in Canada. It offers a yield of around 3%, which is an enhanced version of its typical low yield and a result of the discount it’s trading at.

However, it also offers one of the most financially stable dividends (among the REITs) and is an Aristocrat that has grown its payouts for 11 consecutive years.

An industrial REIT

Dream Industrial REIT (TSX:DIR.UN) is a great example of the kind of real estate assets most investors can only get access to through a REIT and may not buy/invest in directly. It has a portfolio of about 330 industrial properties in Canada, Europe, and the United States. The geographically diversified portfolio offers the company multiple growth avenues.

From an income perspective, the REIT is more generous than InterRent. It’s currently offering a yield of about 5.3%, partly due to the 26% discount it’s currently trading at. Its financials, including its funds from operations, are quite healthy, reflecting financially sustainable dividends.

The REIT has maintained the same payouts for 10 years, so even though you can be reasonably sure about the REIT’s dividend sustainability, it might not be wise to expect dividend growth.

Foolish takeaway

The two REITs offer sustainable and financially healthy dividends. Even though the yields seem low compared to most other REITs in Canada, they are actually quite decent, considering their historical yields. The credit here goes to the bear market phase of the two REITs, which they have yet to recover from.

The post 2 REITs to Buy to Earn Like a Lazy Landlord appeared first on The Motley Fool Canada.

Should you invest $1,000 in Dream Industrial REIT right now?

Before you buy stock in Dream Industrial REIT, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dream Industrial REIT wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,271.97!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 32 percentage points since 2013*.

See the 10 stocks * Returns as of 5/21/24

More reading

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Dream Industrial Real Estate Investment Trust. The Motley Fool has a disclosure policy.

2024