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What are we looking for?

Sustainable dividends from Canadian REITs focused on the hot residential market.

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Leon’s Furniture Ltd. this week announced plans to build 4,000 homes – including rental units – on 40 acres of land it owns in Toronto’s northwest. The move highlights the long-term demand for housing in Canada and the positive outlook for residential apartment REITs.

This latest news follows Leon’s May, 2023, announcement that it aims to create a REIT of its own to unlock the value of its real estate across the country.

Residential REITs, in general, should keep benefiting from the current strong rental demand.

Today’s apartment shortages in part reflect the impact of high interest rates, which have discouraged many renters from making the leap to home ownership. While high interest rates have also affected the share prices of debt-heavy REITs, residential REITs have remained an industry bright spot.

Our search started with Canadian REITs benefiting from attractive occupancy rates and focused on the residential market. From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • two points if it has raised the payment in the past five years;
  • one point for management’s commitment to dividends;
  • one point for operating in non-cyclical industries;
  • one point for limited exposure to foreign currency rates and freedom from political interference;
  • two points for a strong balance sheet, including manageable debt and adequate cash;
  • two points for a long-term record of positive earnings and cash flow to cover dividends;
  • one point if the company’s an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of the Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor, and the TSI Dividend Advisor. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Residential REITs with reliable dividends

Ranking*CompanyTickerDiv. Sustain. RatingPointsDiv. Yld. (%)Mkt. Cap. ($ Mil.)1Y Ttl. Rtn. (%) Recent Price ($)
1Morguard North American Residential REITMRG-UN-TAbove Average74.9578.0-15.915.14
2Killam Apartment REITKMP-UN-TAbove Average73.72,221.11.418.73
3Canadian Apartment Properties REITCAR-UN-TAbove Average73.17,849.2-4.746.67
4Minto Apartment REITMI-UN-TAbove Average73.0666.9-2.116.51
5InterRent REITIIP-UN-TAbove Average72.81,956.4-6.013.47
6Boardwalk REITBEI-UN-TAbove Average71.73,781.325.469.80
7Northview Residential REITNRR-UN-TAverage57.850.810.514.10

Source: Dividend Advisor. 

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements.

Our TSI Dividend Sustainability Rating System generated a list of seven REITs. Toronto’s Canadian Apartment Properties REIT CAR-UN-T is one of Canada’s largest apartment property owners, operating mostly in Ontario, but also in six other provinces and the Netherlands. Killam Apartment REIT KMP-UN-T, headquartered in Halifax, owns and operates a portfolio of apartment properties and manufactured housing (trailer) communities. Calgary’s Boardwalk REIT BEI-UN-T is one of Canada’s largest owner/operators of multifamily rental communities. Also based in Calgary, Northview Residential REIT NRR-UN-T owns income-producing rental properties in secondary markets within Canada. Minto Apartment REIT MI-UN-T, based in Ottawa, owns income-producing rental properties in Toronto, Ottawa, Calgary and Montreal. InterRent REIT IIP-UN-T, also headquartered in Ottawa, owns and operates rental apartment properties in Ontario, Montreal and Vancouver. And finally, Morguard North American Residential REIT MRG-UN-T, based in Mississauga, owns a portfolio of multiresidential properties in Canada (41 per cent of its total number of units) and the United States (59 per cent).

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 16/04/24 1:33pm EDT.

SymbolName% changeLast
MRG-UN-T
Morguard Na Residential REIT Units
+0.58%15.62
KMP-UN-T
Killam Apartment REIT
-0.18%16.96
CAR-UN-T
CDN Apartment Un
-0.9%43.02
MI-UN-T
Minto Apartment REIT
-0.54%14.62
IIP-UN-T
Interrent Real Estate Investment Trust
-0.42%11.98
BEI-UN-T
Boardwalk Real Estate Investment Trust
-0.17%71.5
NRR-UN-T
Northview Residential REIT
-0.95%13.58

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