My Rental Income from 7 Canadian REITs

Many people like to receive rent from properties. On the other hand, I don’t want to manage properties or spend time keeping good relationships with tenants. Instead, I like to sit back and receive passive rental income from my Canadian REITs.

My Canadian REIT portfolio of 7 companies that make up roughly 12% of my dividend portfolio. Yet, they contribute close to 22% of my portfolio income.

I first go over my highest yielding Canadian REITs that offer income of 9% or higher. Then, I talk about the less risky REITs with yields of 4-6%.

By analyzing my Canadian REIT income portfolio, we can probably learn something. Here it goes!

REITs Provide Good Income

The first thing to note is that my Canadian REIT portfolio generates 22% of the income in my dividend portfolio even though it only makes up 12% of my portfolio value. That seems to indicate that distributions is a major part of REIT returns.

Well, it’s true that many REITs, including 4 of my REIT holdings yield 9% or higher right now.

Canadian REIT Portfolio Allocation

I analyzed my REIT portfolio in terms of their allocation according to market value, as well as income allocation. And I will talk about each Canadian REIT later on in the article as well.

My Canadian REIT allocation by value and by income

Source: Author

You’d notice that 28% of my Canadian REIT portfolio is Plaza Retail REIT (TSX:PLZ.UN), and it also contributes to 22% of my Canadian REIT income. I’m comfortable with the concentration in Plaza Retail REIT because of its track record and growth potential.

Northview Apartment also has a good track record of maintain distributions. However, its properties are mostly located in resource provinces. So, it is a good income play, but should only be bought when its yielding around 9% at historical highs.

The other Canadian REITs add diversification to the REIT income stream. Looking at the industry or asset class allocation, it looks pretty balanced with residential REITs making up almost one-third of the pie. That’s fine because everyone needs to live somewhere. If you’re not buying, you’re renting. Read More

Safest Dividends On the Planet

Want to create a secure, growing income stream from your dividend stock portfolio? What are the characteristics of the safest dividends? Investors buy dividend stocks for the stable income. So it’s essential to choose stocks that would actually generate safe, growing dividends.

The characteristics for the safest dividends include:

  • stable earnings
  • culture of increasing dividends, and
  • conservative payout ratio

get safe dividends

Stable Business. Stable Earnings.

Behind each stock that pays a dividend is a business. If the business is not profitable, it cannot pay healthy dividends. Which sector or industry is the business in? The type of the business helps us determine whether a business’ earnings are stable or not.

For example, consumer staples and utilities typically generate very stable earnings because there’s a consistent demand for their needed products and services no matter how the economy is doing.

On the other hand, businesses whose profitability rely on commodity prices can fall hard in price. Many energy companies have cut their dividends in this oil rout.

Look at Crescent Point Energy Corp (TSX:CPG)(NYSE:CPG) and Canadian Oil Sands Ltd (TSX:COS) as examples. In 2015, they slashed dividends by 57% and 86%, respectively. What did you expect? Both are expected to earn negative earnings in fiscal year 2015.

There’s a similar situation with regards to falling earnings for the miners such as Teck Resources Ltd (TSX:TCK.B)(NYSE:TCK) and BHP Billiton plc (ADR) (NYSE:BBL)(NYSE:BHP). Falling earnings have led to falling prices for energy companies and mining companies alike. Read More

Should You Buy These Industrial Dividend Stocks?

Some Industrial dividend stocks have dipped 25-30% from their 52-week highs. I believe they give a sense that the sector isn’t doing well, but is there value to be found? The dividend stocks covered are Union Pacific Corporation (NYSE:UNP), W W Grainger Inc (NYSE:GWW), and one more.

Three companies is a small subset to draw a conclusion from, but I believe they can be telling. To look at a more representative group, check out the Industrial Select Sector SPDR® Fund (NYSEARCA:XLI) that consists of 66 Industrials.

The Industrial Dividend Stocks

Union Pacific train

These Industrial dividend stocks have tumbled in the double-digits in the past year. They have solid balance sheets with S&P credit ratings of A or better.

  • At $49, Emerson Electric Co. (NYSE:EMR) has retreated 25% from its 52-week high of $65.
  • Around $85, Union Pacific is 31% below its 52-week high of $124.
  • At $193, W W Grainger Inc is down 26% from its 52-week high of $261.
Ticker Industry 1Yield 2S&P Credit Rating 3DG Streak (Years) 2Debt/Cap
EMR Diversified Industrials 3.9% A 58 28%
UNP Railroads 2.6% A 9 37%
GWW Industrial Distribution 2.4% AA- 44 34%

Data from close of November 17, 2015.

  1. Estimations from Google Finance
  2. From F.A.S.T. Graphs
  3. From CCC List found here

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