Navigating the World of REITs: Dividend Gems in the Canadian Real Estate Sector

edit Real Estate Investment Trust REIT on double exsposure business background.
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Written by Amy Legate-Wolfe at The Motley Fool Canada

Canadian Real Estate Investment Trusts (REIT) have been hit hard in recent years. The pandemic itself hit real estate stocks hard. Whether it was office buildings or retail, everyone saw a drop. This hasn’t found much relief, given that inflation put people off from returning, and interest rates rising led to problems as well.

However, there have been a few real estate stocks that I would still consider picking up. In fact, these Canadian real estate stocks are doing well, and should continue to do so in the future.


Canadian Apartment Properties REIT (TSX:CAR.UN) has been a strong performer in the last few years. Canadians are looking for lower cost options as housing costs surge and interest rates remain elevated. Because of this, there has been a major demand for apartment properties.

This is why CAPREIT has been doing so well. But honestly, it’s been doing well for quite a long time before now. With decades of experience behind it, the company has expanded across North America, and even into Europe.

CAPREIT stock now offers a 3.16% dividend yield for investors, trading at just 0.83 times book value, with shares up about 9% in the last year. That’s saying a lot, considering most other real estate stocks remain down. And with so many people continuing to seek out apartments in the future, CAPREIT stock looks like a solid long-term hold.

Granite REIT

Another area of real estate stocks that remains strong are industrial stocks. These companies remain in high demand, as industrial properties take minimal upkeep, need usually just one tenant, and continue to be a necessity in the expansion of ecommerce. And right up there is Granite REIT (TSX:GRT.UN).

Granite stock holds hundreds of industrial properties from warehouses to assembly lines. It continues to acquire and build even more across Canada, and isn’t likely to slow down. During its most recent earnings report, Granite stock announced net operating income (NOI) of $109.2 million compared to $94 million the year before, with funds from operations also rising to $79.1 million from $70.7 million the year before.

So at a time when real estate stocks are still struggling, it looks like Granite stock will continue to rise no matter what. It continues to hold high occupancy rates, and when the market recovers should have more opportunities to expand as well. Meanwhile, it currently offers a 4.68% dividend yield, but a deal trading down 12% in the last year. However, just in the last week there have been signs the company is climbing back after earnings. So it could be a great time to grab hold.

Bottom line

There are plenty of real estate stocks out there, and others that Canadians could certainly consider. However, above them all I would look to CAPREIT stock and Granite stock on the TSX today. Each offer long-term income and growth thanks to a history of expansion and seeking out opportunities. And with both apartment and industrial property use set to rise, they remain safe options for investors to pick up today for income and growth.

The post Navigating the World of REITs: Dividend Gems in the Canadian Real Estate Sector appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.