Passive income is income that is generated through means other than employment or through money earned as a contractor. Some types of passive income include rental income from an owned property, royalties from a published novel or another creative endeavor, or through online sales of a particular product.
Today, I want to explore how you can build a strong passive-income portfolio through the investment route with just $15,000 to start. In this piece, I want to target real estate investment trusts (REITs) for their dependability and high-income yields. Let’s jump in.
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Here’s the first REIT I’d target for our passive-income portfolio in 2023
Automotive Properties REIT (TSX:APR.UN) is the first real estate investment trust (REIT) I want to target for our passive-income portfolio. This Toronto-based REIT is focused on owning and acquiring primarily income-producing automotive dealership properties in Canada. Its shares rose 1.22% on Thursday, June 29.
This REIT released its first-quarter (Q1) fiscal 2023 earnings on May 11. Automotive Properties REIT delivered adjusted funds from operations (AFFO) per unit of $0.229. Meanwhile, rental revenue increased 12% year over year to $22.8 million. Same-property cash net operating income (NOI) rose 2.4% to $16.1 million.
Shares of this REIT closed at $11.59 on June 29. For our hypothetical, we can purchase 400 shares of Automotive Properties REIT for a total price of $4,636. The stock offers a monthly dividend of $0.057 per share. That represents a tasty 6.9% yield. We can now generate monthly passive income of $26.80 going forward.
This REIT offers a big yield right now
Artis REIT (TSX:AX.UN) is a Winnipeg-based REIT with an extensive portfolio of industrial, office, and retail properties in Canada and the United States. Shares of this REIT rose 0.69% in yesterday’s trading session. The stock is down over 35% in the year-over-year period as of close on June 29.
In Q1 2023, Artis REIT saw revenue dip 3.2% year over year to $90.2 million. Moreover, net operating income declined 6.6% to $48.0 million. This REIT closed at $7.21 on Thursday, June 29. We can snag 700 shares of Artis REIT for a purchase price of $5,047. Artis REIT currently offers a monthly dividend of $0.05, which represents a monster 8.3% yield. This purchase will allow us to churn out monthly passive income of $35.
The final REIT I’d target to churn out big passive income
Allied Properties REIT (TSX:AP.UN) is the third and final REIT I want to snatch up today with the remainder of our $15,000 principle. This REIT is a leading operator of distinctive urban workspace in the country’s top metropolitan areas and network-dense urban datacenter space in Toronto. Its shares rose marginally in Thursday’s trading session.
This REIT closed at $21.61 on Thursday, June 29. We can snatch up 245 shares of Allied Properties REIT for a total price of $5,294.45. This REIT offers a monthly distribution of $0.15 per share, representing an 8.3% yield. The investment means we can generate monthly passive income of $36.75 from here on out.
Bottom line
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| APR.UN | $11.59 | 400 | $0.057 | $26.80 | Monthly |
| AX.UN | $7.21 | 700 | $0.05 | $35 | Monthly |
| AP.UN | $21.61 | 245 | $0.15 | $36.75 | Monthly |
The investments in these high-yield REITs will allow us to generate monthly passive income of $98.55. That works out to an annual passive-income rate of $1,182.60.
