3 Top REITs in Canada for Trustworthy Dividends

Looking for stable but high passive income? These three REITs are your “ticket to passive income heaven.”

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published September 23, 2024 7:00 pm EDT

Real Estate Investment Trusts (REITs) are strong long-term investments for any Canadian investor. These offer a combination of steady income through dividends and potential for capital appreciation. Historically, REITs have delivered an average annual return of 11.5% over the past 20 years, outperforming many other asset classes. Plus, REITs are required by law to distribute at least 90% of taxable income to shareholders, thereby making them a reliable source of passive income. This steady cash flow, along with the appreciation of real estate assets over time, makes REITs a great choice for long-term investors looking for stability and growth. So, let’s look at the strongest options out there!

View of high rise corporate buildings in the financial district of Toronto, Canada — Source: Getty Images

BTB

BTB REIT (TSX:BTB.UN) is an excellent choice for long-term passive income seekers, especially with its strong dividend yield of 8.4%. The investor in industrial, suburban office, and necessity-based retail properties has a market cap of $311.4 million and a forward price/earnings (P/E) of 8.9, offering an attractive valuation for investors. Despite a slight dip in earnings growth, the trust’s operating margin remains healthy at 51.3%, indicating efficient operations. Plus, with a payout ratio of 85.7%, BTB is committed to maintaining its solid dividend payments.

One key highlight is BTB’s earnings momentum. For the most recent quarter ending June 30, 2024, BTB reported revenues of $128.1 million, showing steady growth despite some headwinds. Its operating cash flow stands at $69 million, further boosting their ability to sustain dividend payouts. As the trust continues to grow and stabilize, it remains a prime candidate for long-term income-focused investors. As one analyst put it, “BTB’s steady revenue and impressive dividend yield make it a strong contender in the Canadian REIT market for those seeking passive income.”

Slate Grocery

Slate Grocery REIT (TSX:SGR.UN) stands out as a great long-term passive income investment, especially with its strong 8.3% dividend yield. With a market cap of $836.1 million and a forward P/E of 7.6, this REIT is attractively priced for income seekers. Even though the REIT experienced a slight dip in quarterly earnings growth, its operating margin remains a robust 75.7%, thus indicating efficient management of its operations. Plus, with an impressive payout ratio of 153%, Slate Grocery is committed to rewarding its investors with consistent and substantial dividend payments.

Despite some challenges in the most recent quarter, Slate Grocery REIT continues to demonstrate earnings momentum, with a total revenue of $209.1 million for the trailing 12 months. Operating cash flow of $71 million reinforces its capacity to sustain dividend payouts. As the REIT continues to manage its portfolio and optimize operations, it remains a strong pick for long-term passive income investors. As one analyst noted, “Slate Grocery’s strong focus on operational efficiency and high dividend yield make it a compelling choice for income-focused investors looking for stability in the grocery real estate sector.”

Automotive properties

Automotive Properties REIT (TSX:APR.UN) is a solid pick for long-term passive income, especially with its attractive 6.4% dividend yield. The trust’s market cap sits at $616.1 million, and its trailing P/E ratio of 8.3 signals that it’s trading at a reasonable valuation. APR.UN boasts an impressive profit margin of 76.2%, which reflects strong operational efficiency. Plus, with a payout ratio of 53%, it demonstrates a healthy balance between rewarding investors and retaining capital for future growth.

Earnings momentum for APR.UN is particularly encouraging. For the most recent quarter ending June 30, 2024, the REIT reported quarterly revenue growth of 2.5% year-over-year, with net income climbing by an impressive 78.5%. Operating cash flow of $79.2 million further underscores its ability to maintain and potentially grow dividends over time. As one analyst noted, “Automotive Properties REIT combines solid fundamentals with a steady revenue stream, making it a great choice for income-focused investors.”

Bottom line

If you’re on the hunt for solid long-term passive income, BTB REIT, Slate Grocery REIT, and Automotive Properties REIT are all standout options. With each offering strong dividend yields above 6% and solid earnings momentum, these REITs are perfect for anyone looking to add steady, reliable income to their portfolio. As one analyst put it, these REITs are “your ticket to passive income heaven.”