Are you about to retire? Are you looking to generate monthly revenue? Generally, dividends are paid quarterly. However, some Canadian companies pay monthly distributions. Most of them are Real Estate Income Trusts (REITs); here is our selection of the best monthly REITs for 2024. We also include the list of all REITs paying a monthly distribution.
Download the list of Canadian companies, in all sectors (not just REITs), that pay monthly dividends!
What makes REITs great monthly payers?
As most companies prefer to keep cash in their account and wait to pay shareholders at the end of the quarter, many Canadian REITs have opted for a monthly distribution structure.
Imagine that you purchase a rental property. Every month, you would receive payments from tenants, making up a perfect monthly revenue source, right? Well, REITs are structured the same way, except they own several properties with several tenants. Since they receive a monthly cash flow stream, they share the wealth and pass the money along to unitholders.
Monthly distribution REITs list
At DividendStocksRock, we track over 1,200 dividend-paying stocks. Only 72 Canadian companies pay a monthly dividend from this list, and over half of them (39) are REITs. Here is the complete list of all monthly distribution REITs.
Our Top 3 Monthly REITs
Some of the best Canadian REITs are paying a monthly distribution. Here are some of our favorites:
Granite REIT (GRT.UN.TO)
- Market Cap: $5B
- Dividend Yield: 4.41%
- Sub-Sector: Industrial
GRT used to be an extension of Magna International (MG.TO). In 2011, Magna represented about 98% of its revenues. It is now down to 25% as of November 2023 (with Amazon as its second-largest tenant with 4% of revenue). You’ll notice that each year, GRT reduces its exposure by a few percentage points. Management has transformed this industrial REIT into a well-diversified business without adversely affecting shareholders. GRT now manages 138 properties across 7 countries. Each time we review this stock card, the number of properties increases while the exposure to Magna Intl reduces. The REIT also boasts an investment grade rating of BBB/BAA2 stable. With a low FFO payout ratio (around 70-75%), shareholders can enjoy a 5% yield that should grow and match or beat the inflation rate. This is among the rare REITs exhibiting AFFO per unit growth while issuing more units to finance growth.
Dividend Growth Perspective
GRT has maintained a solid dividend growth policy over the past 5 years (4%+ CAGR). With its FFO payout ratio well under control shareholders should expect a mid single-digit dividend growth rate going forward. The AFFO payout ratio was under 73% for Q3 2023 (reported in November 2023). You can expect more distribution increases going forward! The company even paid a special dividend in 2019. If the Magna International business is doing well, GRT will perform and keep increasing its dividend. The REIT offered a conservative distribution increase in November of 2023 with a raise of 3.125%. We issued a buy rating on Granite a while ago. The stock price has bounced back to a point, but we still see this as a buy.
CT REIT (CRT.UN.TO)
- Market Cap: $2B
- Dividend Yield: 6.15%
- Sub-Sector: Retail
An investment in CT REIT is primarily an investment in Canadian Tire’s real estate business. If you think this Canadian retail giant will do well in the future, but you are more interested in dividends than pure growth, CT REIT could be a good fit for you. Canadian Tire has exciting growth plans that will eventually lead to more triple-net leases for CT REIT. The fact that CRT pays a monthly dividend with a 6% yield is highly attractive to income-seeking investors. On top of that, CT REIT exhibits a decent dividend growth rate policy, matching and beating inflation over the long haul. In the past 10 years, the company grew its revenue and AFFO by mid-single digits numbers. This makes it a perfect candidate for an income-focused portfolio. Canadian Tire has done well in the past 5 years thus far and has proven the resilience of its business model. It’s a sleep well at night REIT that should please all income-seeking investors.
Dividend Growth Perspective
This REIT continues to grow and maintain a low AFFO payout ratio of 75% for full year 2022. The AFFO payout ratio for the first nine months of 2023 is at 73.2% (slightly below 2022 numbers). This means your distribution will likely continue to increase faster than the inflation rate going forward. Shareholders can expect to cash in a solid 6% yield with a ~3% growth rate. This is a perfect example of a sleep-well-at-night type of holding. After a small increase in 2020 (+1.5%), CT REIT came back strong with increases of 4.5% and 3.3% in 2021 and 2022, respectively. Keep in mind that many retail REITs cut their dividend over the pandemic. CT REIT has proven that an investor can trust the company to be part of their retirement plan. CT REIT rewarded investors with another 3.5% distribution increase in 2023. Even with a conservative DDM calculation (expected dividend growth of 3%), the REIT offers an attractive entry point at a price below $15.
Canadian Apartment Properties REIT (CAR.UN.TO)
- Market Cap: $8B
- Dividend Yield: 3.06%
- Sub-Sector: Residential
If an investor is looking for a steady source of income that will keep up with inflation, CAPREIT should be on their watchlist. In addition to enjoying a strong core business in Canada, CAPREIT is expanding its business in Ireland and the Netherlands. This gives them additional geographic diversification. CAPREIT continues to exhibit high-single-digit organic growth while raising additional funds to acquire more buildings. Unfortunately, the REIT neglected to increase its dividend in 2020. We cannot blame management for being overly cautious over the pandemic; they were fortunately stronger in 2021 and won back their dividend safety score of 3.
Dividend Growth Perspective
Over the past 5 years, management has been able to steadily increase its monthly distribution. After taking a break in 2020, CAPREIT returned with a generous dividend increase (+5.2%) from $0.115 per share to $0.121 per share earlier in 2021. Unfortunately, there wasn’t a dividend increase in 2023 (but rather a special dividend). Since CAPREIT generated capital gains through the sales of properties in 2023, the REIT issued a non-cash special dividend of $0.49 per unit. We will wait in 2024 to see if there will be a distribution increase but we may have to revise the REIT’s dividend safety. In the meantime, the REIT exhibits a strong FFO payout ratio of 60.5% for the first 9 months of 2023. Management has proven its ability to grow its revenues both organically and through acquisitions. The recent stock price drop brought the yield around 3%; this looks like a good deal if you are prepared to be patient (e.g., expect more volatility throughout the rest of the year).
Download the list of Canadian companies, in all sectors (not just REITs), that pay monthly dividends!
Those REITs are great, but there’s more!
If you look at past performances, Real Estate Income Trust is one of the best performing classes during high inflation periods since the 70s. Unfortunately, not all REITs are created equal and you must do adequate research to make sure you buy the right ones.
In this webinar, I answer questions like:
- How about REITs paying a 10% yield
- How to make sure the REIT’s distribution is safe
- Which metrics to consider during my analysis?
- Should I consider mortgage REITs?
