Money is tight in the pandemic-induced recession, but there are options that will make your money more money. If you buy and own shares of three real estate investment trusts (REITs), you have cash cows to increase your disposable income.
The average dividend yield of Automotive properties (TSX: APR.UN), Northwestern Healthcare Properties (TSX: NWH.UN), et Smart centers (TSX: SRU.UN) is 6.21%. An investment of $ 30,000 ($ 10,000 in each share) will produce $ 155.25 of passive income each month. If you reinvest the dividends instead, your money will rise to $ 54,799.34 in 10 years.
Automotive Properties is growth driven with a niche game. This $ 498.87 million REIT owns 66 income-generating auto dealership properties across Canada. The real estate brands of the dealers are predominantly European and Asian, from low-end car models to luxury car models.
The REIT has low operating costs due to the triple net leases. Tenants or tenants spend money on property taxes, home insurance, repairs and maintenance, and utilities. They are also responsible for non-structural improvements. The average lease term is currently around 12.4 years and each lease includes a contractual clause for a fixed rent increase.
You might think the REIT didn’t make any money during the pandemic. On the contrary, management announced a 4% increase in rental income in the first quarter of 2021 (quarter ended March 31, 2021) compared to the first quarter of 2020. The net result notably reached a high level of 67%. At $ 12.77 per share and a 6.30% dividend, you get the best deal from Automotive Properties.
NorthWest Healthcare is without a doubt the first pandemic stock in the real estate industry. It has a market capitalization of $ 2.79 billion and is the only real estate title in the spa industry. The REIT owns and operates 186 income producing properties consisting of hospitals, clinics and medical office buildings in Canada and abroad.
Total revenue of $ 92.6 million in the first quarter of 2021 (quarter ended March 31, 2021) remained stable, although net operating income (NOI) was slightly down 3% from the first. quarter 2021. Rent collections and property occupancy were 98.6% and 97%, respectively. Regarding rental contracts, the weighted average maturity is 14.3 years.
Management lists two key priorities for the remainder of 2021. The REIT will continue to expand geographically to evolve its global asset management platform. The current stock price is $ 12.97, while the dividend yield is 6.17%.
Fully integrated high yield REIT
SmartCentres is almost double the size of NorthWest Healthcare. As of August 3, 2021, the market capitalization was $ 5.1 billion. This REIT is fully integrated with 168 properties in its value portfolio. The top four contributors to recurring revenue are residential apartment buildings (96), high-rise condominiums (72), self-storage facilities (50), and retirement homes (40).
The rental business suffered in 2020 due to the pandemic. In the first quarter of 2021 (quarter ended March 31, 2021), net operating income was down 5.9% compared to the first quarter of 2020. Management attributes it to a decrease in base rent and an increase in bad debts. . Despite government-mandated closures, SmartCentres recorded in-place and committed occupancy rates of 97% and 97.3%.
Note that SmartCentres has 3,400 tenants and Wal-Mart is the primary tenant in 115 properties. At $ 29.97 per share, investors are enjoying a 35% gain since the start of the year. The dividend offer is a high dividend of 6.17%.
Create a financial cushion
If you save money during the pandemic, it would help you financially if you could invest it in the three targeted REITs. Milk cows can provide a much needed cushion.
Foolish contributor Christopher Liew has no position on any of the stocks mentioned. The Motley Fool owns shares and recommends AUTOMOTIVE PROPERTIES REIT. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS and Smart REIT.