I was absolutely thrilled to find out about Canadian Net REIT (TSXV:NET) around April this year, which is about when I started buying the quality real estate investment trust (REIT) in my Tax-Free Savings Account (TFSA). You might know the company, which is formerly known as Fronsac REIT (TSXV:FRO.UN).
I found the top-notch dividend stock when I was going through the Canadian Dividend All-Star List — you can obtain the latest version here. Just to be clear, I’m not affiliated with that website in any way. The author explains the list as “a free spreadsheet with an abundance of useful dividend screening information on Canadian companies that have increased their dividend for five or more years in a row.”
I haven’t found any similar company as Canadian Net REIT on the Canadian exchanges (yet). There are bigger versions of it on the NYSE though, including Realty Income (NYSE:O) and the like.
Real estate is a traditional way to generate passive income. Investors no longer need to take on a lot of debt or purchase individual properties to earn income from real estate.
Nowadays, it’s as easy as ever for anyone to become passive landlords by investing in real estate investment trusts (REITs). REITs have professional management to take care of a diversified portfolio of real estate assets, including mortgages.
You can immediately generate what’s similar to rental income passively by simply buying units of REIT ETFs. Investopedia introduced three top Canadian REIT ETFs. I’ve ordered the REIT ETFs based on their net asset values from large to small. Let’s explore to see if they could be good purchases for real estate income.
The Canadian Dividend Aristocrat list is a good place to explore prospective dividend stocks for buying. There are dividend stocks that grow their dividends at an incredible pace. Ideally, we aim to focus on dividend stocks with long-term growth trends.
Typically, the longer the dividend growth streak of a dividend stock, the better. But you’ve got to investigate its business and determine if more above-average growth is coming. And make sure you pay a reasonable multiple for the stock.
You can observe the one- and three-year dividend growth rates (DGR) to get an idea of recent dividend increases. Also, look at the five- and 10-year DGR. The 10-year rate will likely include a recession, which provides a glimpse of how resilient the business might be during tough economic times. Dig into the year(s) of recession for the real resilience of the business.
Here are some of the top Canadian Dividend Aristocrats with incredible five-year DGR. Stocks with high dividend growth tend to have small yields. (Typically, you would find blue-chip Canadian dividend-growth stocks growing dividends in the 5-7%. It would be amazing to find one growing its dividend at 10%.)
Dividend stock
DG streak
5-year DGR
Recent Yield
goeasy (TSX:GSY)
6
35.1%
1.6%
Agnico Eagle Mines (TSX:AEM)(NYSE:AEM)
5
24.3%
2.3%
Savaria (TSX:SIS)
8
22.4%
2.4%
Canadian Pacific Railway (TSX:CP)(NYSE:CP)
5
20.5%
0.8%
Enghouse Systems (TSX:ENGH)
14
19.1%
1.1%
Source: Data for DG streak and 5-year DGR columns are from the Canadian Dividend All-Star list. Data for Recent Yield column is from Yahoo Finance.
We believe by going through many examples, investors can better identify the type of dividend stocks to invest in for long-term buy and hold or potentially sizing a position accordingly for trading. Here are five dividend stock examples.
