3 Cash Cows Paying More Than 6% Dividends

Money is tight within the pandemic-induced recession, however there are alternatives that can enable your cash to earn more money. If you buy and personal shares of three actual property funding trusts (REITs), you’ve gotten money cows to spice up your disposable earnings.
The common dividend yield of Automotive Properties (TSX:APR.UN), NorthWest Healthcare Properties (TSX:NWH.UN), and SmartCentres (TSX:SRU.UN) is 6.21%. A $30,000 ($10,000 in every inventory) funding will produce $155.25 in passive earnings each month. If you reinvest the dividends as a substitute, your cash will compound to $54,799.34 in 10 years.
Auto dealerships
Automotive Properties is growth-oriented with a distinct segment play. This $498.87 million REIT owns 66 income-producing automotive dealership properties throughout Canada. The supplier property manufacturers are primarily European and Asian, from low-end to luxurious automotive fashions.
The REIT has low working prices due to the triple-net lease contracts. Tenants or lessees spend cash on realty taxes, property insurance coverage, restore & upkeep, and utilities. They’re additionally answerable for non-structural enhancements. The common lease time period is at present about 12.4 years, and every lease has a contractual fixed-rent enhance provision.
You would possibly suppose the REIT didn’t earn cash throughout the pandemic. On the opposite, administration reported a 4% enhance in rental income in Q1 2021 (quarter ended March 31, 2021) versus Q1 2020. Notably, web earnings was a excessive 67%. At $12.77 per share and a 6.30% dividend, you get one of the best deal from Automotive Properties.
Pandemic inventory
NorthWest Healthcare is undoubtedly the highest pandemic inventory in the true property sector. It has a market cap of $2.79 billion and is the one actual property inventory within the treatment sector. The REIT owns and operates 186 income-producing properties consisting of hospitals, clinics, and medical workplace buildings in Canada and internationally.
The complete income of $92.6 million in Q1 2021 (quarter ended March 31, 2021) was secure, though web working earnings (NOI) slid barely by 3% versus Q1 2021. Rent collections and property occupancy have been excessive at 98.6% and 97%, respectively. Regarding lease contracts, the weighted common expiry is 14.3 years.
Management lists two key priorities for the remainder of 2021. The REIT will pursue geographic growth to scale its international asset administration platform. The present share worth is $12.97, whereas the dividend yield is 6.17%.
Fully-integrated high-yield REIT
SmartCentres is sort of double the dimensions of NorthWest Healthcare. As of August 3, 2021, the market cap is $5.1 billion. This REIT is totally built-in with 168 properties in its value-oriented portfolio. The high 4 contributors to recurring earnings are residential condominium buildings (96), high-rise condos (72), self-storage amenities (50), and seniors’ residences (40).
The rental enterprise suffered in 2020 as a result of pandemic. In Q1 2021 (quarter ended March 31, 2021), web working earnings dipped 5.9% versus Q1 2020. Management attributes it to a lower in base lease and a rise in dangerous debt. Despite the government-mandated shutdowns, SmartCentres reported 97% and 97.3% in in-place and dedicated occupancy charges.
Note that SmartCentres has 3,400 tenants and Wal-Mart is the anchor tenant in 115 properties. At $29.97 per share, buyers take pleasure in a 35% year-to-date achieve. The dividend supply is a hefty 6.17% dividend.
Create a monetary cushion
If you socked away cash throughout the pandemic, it might enable you financially in the event you can make investments some within the three REITs in focus. The money cows can present a much-needed cushion.

This article represents the opinion of the author, who might disagree with the “official” advice place of a Motley Fool premium service or advisor. We’re Motley! (*3*) an investing thesis — even one among our personal — helps us all suppose critically about investing and make choices that assist us turn out to be smarter, happier, and richer, so we typically publish articles that is probably not in keeping with suggestions, rankings or different content material.

Fool contributor Christopher Liew has no place in any of the shares talked about. The Motley Fool owns shares of and recommends AUTOMOTIVE PROPERTIES REIT. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS and Smart REIT.


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