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Passive-Income Power: Earn $99/Week TAX FREE With 3 Top REITs

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Various Canadian dollars in gray pants pocket
Various Canadian dollars in gray pants pocket

Written by Ambrose O'Callaghan at The Motley Fool Canada

Passive income is money earned from very little or no active labour on the part of the investor. The establishment of a strong passive income is a major milestone. Today, I want to discuss how investors can achieve that goal with the aid of real estate investment trusts (REITs). These are fantastic sources of income in this market. Moreover, I want to target these REITs in a Tax-Free Savings Account (TFSA), which will allow us to generate tax-free income going forward. Let’s jump in.

This healthcare REIT offers defence and big dividends

Northwest Healthcare REIT (TSX:NWH.UN) is a Toronto-based REIT that offers investors exposure to healthcare real estate around the world. Its shares have increased 1.1% in 2022 as of late-morning trading on April 13. The stock is up 5.6% in the year-over-year period.

This REIT proved to be a top defensive option for investors during the COVID-19 pandemic. Indeed, investors should bet on increased activity at healthcare facilities going forward. This will be bolstered by aging populations across the developed world.

Shares of this REIT were trading at $13.82 in mid-morning trading today. In our hypothetical, we’ll snatch up 1,965 shares for a total purchase price of $27,156.30. Northwest Healthcare currently offers a monthly distribution of $0.067 per share, representing a 5.7% yield. This will allow us to generate weekly passive income of $30.38 in our TFSA going forward.

Passive-income investors should look to target True North today

True North REIT (TSX:TNT.UN) is another REIT that operates a portfolio of office properties across Canada. This stock has dropped 6.1% in the year-to-date period. That has pushed the REIT into negative territory from the prior year.

In 2021, True North saw its same property net operating income (NOI) rise to $88.4 million compared to $87.9 million in the prior year. Meanwhile, adjusted funds from operations (AFFO) remained flat in the year-over-year period.

This REIT was trading at $6.97 per share at the time of this writing. In this scenario, we’ll look to snag 3,900 shares of True North REIT for a purchase price of $27,183. True North last paid out a monthly distribution of $0.05 per share. That represents a monster 8.5% yield. This investment will allow investors to generate tax-free passive income of $45 on a weekly basis.

One more REIT that can complete your passive-income portfolio

American Hotel REIT (TSX:HOT.UN) is the last REIT I’d look to target to build a passive-income portfolio. Investors may want to target this space, as travel demand and tourism is on the rise after two pandemic-ridden years. Shares of this REIT have climbed 1.5% in 2022.

The American Hotel REIT was trading at $3.85 per share in mid-morning trading on April 13. For our final purchase, we’ll pick up 7,050 shares for a total purchase price of $27,142.50. This REIT last paid out a monthly dividend of $0.015 per share. That represents a strong 5.8% yield. We can now count on weekly passive income of $24.42 going forward.

Bottom line

These REIT purchases will allow investors to generate weekly passive income of $99. That works out to annual tax-free income of over $5,000.

The post Passive-Income Power: Earn $99/Week TAX FREE With 3 Top REITs appeared first on The Motley Fool Canada.

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More reading

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.

2022

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