Monthly Income Investors: Why This 5.6% Yielder Is a Better Way to Play the Resurgence of Walmart

Why SmartCentres Real Estate Investment Trst (TSX:SRU.UN) is the Walmart (NYSE:WMT) play for monthly income investors.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It’s hard to ignore the remarkable blowout that Walmart (NYSE:WMT) clocked in last week. Under the impeccable stewardship of CEO Doug McMillon, the company has shown that it can compete and even thrive in an industry in which Amazon.com has been wreaking havoc.

Plenty of investors, including Warren Buffett, counted Walmart out due to the profound disruptive potential of e-commerce juggernauts like Amazon, but it turned out that Buffett, along with the majority of investors, severely discounted the management abilities of Walmart.

It’s not just about Walmart’s e-commerce successes. Second-quarter same-store sales growth (SSSG) was the strongest it’s been in over a decade, jumping 4.5% thanks in part to incredibly enticing prices that are drawing large crowds into its physical stores.

Simply put, Walmart is firing on all cylinders in both realms: e-commerce and brick and mortar. And that has many investors on both sides of the border reconsidering their “death-of-physical-retail” thesis, which has been widely embraced among by the herd over the past few years.

Sure, e-commerce is causing an immense amount of pressure on the physical retailers, and there have been plenty of victims thus far, but let’s be real. Brick and mortar isn’t dead — not even close. Walmart appears to be evidence of this, as it still has a tonne of fight left in it.

As it stands, Walmart is looking like a great stock to own moving forward, but for Canadians, there’s a superior under-the-radar play that’s better catered to both monthly income and deep-value investors alike.

The security I’m speaking of is SmartCentres Real Estate Investment Trst (TSX:SRU.UN), a 5.6%-yielding REIT that dwarfs Walmart’s 2.1% dividend yield.

SmartCentres is a retail REIT that’s behind the SmartCentre malls, many of which are anchored by Canadian Walmart locations. These Walmart stores draw huge crowds to SmartCentres, which, in turn, drives up the value of real estate for SmartCentre’s other tenants.

Although Canadian Walmart stores are considerably different from their U.S. counterparts, I believe recent strategic initiatives that have resulted in profound SSSG numbers will inevitably spread to Canada, where the physical shopping scene appears far more robust.

Foolish takeaway

Shopping centres may look like a dud investment to the average investor, but I don’t think this kind of sentiment is at all in line with reality.

SmartCentres looks like a severely undervalued income play that’s being unfairly discounted by Mr. Market due to the excessive negativity over the “death-of-the-shopping-mall” theme — a theme that I believe will die down as Walmart (and other brick-and-mortar kings) continue to flex their muscles in spite of the disruptive pressures put forth by Amazon and the like.

Stay hungry. Stay Foolish.

Should you invest $1,000 in Walmart right now?

Before you buy stock in Walmart, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Walmart wasn’t one of them. The Top 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 $20,697.16!*

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 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Joey Frenette has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. The Motley Fool owns shares of Amazon.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

Dip Buyers Could Win Big in Today’s Market Dip

If you want to buy the dip, think long-term. Which is why this TSX stock is a top option.

Read more »

Energy Stocks

Is Enbridge Stock (TSX:ENB) a Buy for its 5.9% Dividend Yield?

This solid dividend payer has the potential to help investors generate reliable passive income for decades.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

chart reflected in eyeglass lenses
Stocks for Beginners

Seize the Dip: Investment Opportunities Await This April

If you're looking for one and only one opportunity during a market dip, buy this top stock.

Read more »

gaming, tech
Dividend Stocks

3 Top Communication Services Sector Stocks for Canadian Investors in 2025

Three communication services stocks are solid choices in 2025 if you want exposure to the rejuvenated sector.

Read more »

nugget gold
Dividend Stocks

Recession Stocks Are Back: Consider Buying the Dip This April

Recession stocks are back, and this one could be a solid winner.

Read more »

investor looks at volatility chart
Dividend Stocks

If You Have Cash on the Sidelines, Here’s Where to Invest in the Dip

If you have cash sitting on the sidelines, now may be the perfect time to put it to work in…

Read more »

Pumps await a car for fueling at a gas and diesel station.
Dividend Stocks

Where Will Alimentation Couche-Tard Stock Be in 3 Years?

Let's dive into why Alimentation Couche-Tard (TSX:ATD) remains a top value stock investors may want to consider buying and holding…

Read more »