3 Top High-Yield Canadian REITs for Income-Seeking Investors

Buy these three REITs, including Artis Real Estate Investment Trust Units (TSX:AX.UN), for their high yields, growing asset base, and good value.

office building

Real estate investment trusts (REITs) should be a key part of your diversification strategy. REITs offer exposure to the real estate market and are ideal for income-seeking investors. They offer steady dividends with high yields plus the potential for capital appreciation.

I know what you are thinking: What about rising interest rates? Yes, research points to an inverse relationship. All things being equal, as rates rise it is likely that REITs’ prices will decline. But fear not; I’ve got you covered. When looking at what Canadian REITs to buy, it is important to remember that not all REITs are created equal!

To be considered a top REIT in Canada, I look for income, potential capital appreciation, and good value.

Artis Real Estate Investment Trust Unit (TSX:AX.UN)

Artis is a well-diversified REIT with properties Canada-wide and properties south of the border. The company’s properties are also diversified across industrial, retail, and office asset classes. It has over 230 commercial properties, including the following flagships: Hudson’s Bay Centre, Stampede Station II, Corridor Park, and Crowfoot Village.

Artis’s annual total unit return has outperformed the TSX REIT Index over the past one-, three-, and 10-year periods. The future also looks bright. It has a $200 million development pipeline at positive spreads, and it has a solid balance sheet. It offers one of the highest yields and trades at 9.5 times earnings and below book value. Artis is a Canadian REIT to buy.

Slate Office REIT (TSX:SOT.UN)

Slate is an attractive REIT for income-seeking investors. The company is one of the smaller REITs by market capitalization, but don’t let its size trick you. Slate packs a punch. The company has interests in 45 assets, 87% of which are located in eastern Canada.

The company is ramping up its investments and increasing its net asset value. From 2015 to 2017, the company acquired $842 million worth of assets. In 2018, the company has already acquired $300 million in new assets at a discount to market value.

The best part? It has an industry-leading 9.93% yield, which is well covered by adjusted funds from operations (AFFO). In the past quarter, same property net operating income was up 5.2%, and AFFO grew 21% over last year. Trading at 8.8 times earnings and below book value, Slate is one of the top Canadian REITs.

NorthWest Health Prop Real Est Inv Trust (TSX:NWH.UN)

NorthWest is not a one-trick geographical pony. It has a global presence with a growth‐oriented portfolio in Australasia, Brazil, Germany, and Canada. The company’s asset mix is categorized into hospitals and medical office buildings/clinics. It owns a portfolio of approximately 140 properties.

NorthWest is not afraid to be bold. Case in point, it recently announced a large strategic investment in Australia’s Healthscope Limited. Healthscope is one of Australia’s leading private hospital operators with a portfolio of 45 hospitals concentrated in large metropolitan centres throughout Australia.

Thanks to its aggressive nature, it has grown revenues by a CAGR of 153% over the past four years. It is also one of the few REITs to have delivered positive capital returns over the past number of years. Its 7.07% yield is at the higher end of the industry and is well covered by its 83% payout ratio. NorthWest is an ideal Canadian REIT stock for your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Mat Litalien has no position in any of the companies listed. NorthWest Health Prop Real Est Inv Trust is a recommendation of Stock Advisor Canada.  

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