Sustainable Dividends 7 Canadian apartment REITs with sustainable dividends
What are we looking for?
Sustainable dividends from Canadian REITs focused on the hot residential market.
The screen
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* | Company | Ticker | Div. Sustain. Rating | Points | Div. Yld. (%) | Mkt. Cap. ($ Mil.) | 1Y Ttl. Rtn. (%) |
| 1 | Morguard North American Residential REIT | MRG-UN-T | Above Average | 7 | 4.9 | 578.0 | -15.9 |
| 2 | Killam Apartment REIT | KMP-UN-T | Above Average | 7 | 3.7 | 2,221.1 | 1.4 |
| 3 | Canadian Apartment Properties REIT | CAR-UN-T | Above Average | 7 | 3.1 | 7,849.2 | -4.7 |
| 4 | Minto Apartment REIT | MI-UN-T | Above Average | 7 | 3.0 | 666.9 | -2.1 |
| 5 | InterRent REIT | IIP-UN-T | Above Average | 7 | 2.8 | 1,956.4 | -6.0 |
| 6 | Boardwalk REIT | BEI-UN-T | Above Average | 7 | 1.7 | 3,781.3 | 25.4 |
| 7 | Northview Residential REIT | NRR-UN-T | Average | 5 | 7.8 | 50.8 | 10.5 |
Source: Dividend Advisor.
Our TSI Dividend Sustainability Rating System generated a list of seven REITs. Toronto’s Canadian Apartment Properties REIT 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 headquartered in Halifax, owns and operates a portfolio of apartment properties and manufactured housing (trailer) communities. Calgary’s Boardwalk REIT is one of Canada’s largest owner/operators of multifamily rental communities. Also based in Calgary, Northview Residential REIT owns income-producing rental properties in secondary markets within Canada. Minto Apartment REIT based in Ottawa, owns income-producing rental properties in Toronto, Ottawa, Calgary and Montreal. InterRent REIT also headquartered in Ottawa, owns and operates rental apartment properties in Ontario, Montreal and Vancouver. And finally, Morguard North American Residential REIT 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).