In Canada, you do not necessarily need to buy a property and set it up as a rental to be a real estate investor. Through stock market investing, specifically real estate investment trusts (REITs), you can earn monthly income like a landlord without the hassles that typically come with it.
High inflation and rising interest rates have weighed heavily on the real estate sector. Despite the crunch, many REITs across different sub-sectors of the Canadian real estate industry still offer reliable monthly returns that you can count on.
Belonging to the Healthcare and Industrial sectors, these two top REITs pay high-yielding dividends. Let’s take a closer look to see how they can be good investments for your income-generating portfolio.
NorthWest Healthcare Properties REIT (TSX:NWH.UN) is the one and only REIT in the healthcare sector. The $974.33 million market capitalization trust provides its investors access to a portfolio of high-quality healthcare real estate assets. With a diversified portfolio located in major cities across Canada, Brazil, Germany, and Australasia, it is well positioned to generate strong and stable cash flows.
As of this writing, NorthWest Healthcare stock trades for $4.01 per share, boasting a juicy 8.97% dividend yield. Despite an alarmingly high yield inflated due to declining share prices, it is an attractive investment to consider for passive income. Boasting a 96% occupancy rate and a 13.5-year weighted average lease expiry, it is in a good position to continue funding its monthly payouts for years to come.
Dream Industrial REIT (TSX:DIR.UN) is a pure play on the industrial real estate sector. The $3.27 billion market capitalization trust owns a portfolio of industrial properties across Canada, the U.S., and several European markets. By acquiring and building upon a portfolio in key markets, the trust aims to provide its investors with sustainable and stable monthly cash distributions.
As of June 2023, it boasted a 98% occupancy rate, which bodes good news for the trust and its investors. As of this writing, it trades for $11.64 per share, offering a juicy 6% dividend yield. The trustâs balance sheet remains strong despite ongoing broader market issues.
As rent continues increasing across its markets, the trust is well positioned to grow its rental income and grow shareholder value for years to come.
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NorthWest Healthcare and Dream Industrial are two of the biggest names in their respective sub-sectors of the Canadian real estate industry. Dream Industrial boasts a larger cap and stronger fundamentals than NorthWest Healthcare. Through a new joint venture, it also plans to grow its portfolio, streamline operations, and generate even higher returns in the coming years.
NorthWest Healthcare Properties enjoys the benefit of longer weighted average lease expiry dates, which arguably make its monthly payouts more secure. Between the two, I would invest in the higher-yielding NorthWest Healthcare Properties REIT.
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* Returns as of 10/10/23
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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Dream Industrial Real Estate Investment Trust and NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.