A Nearly Ideal Monthly-Paying REIT With a 5.5% Yield

By Aditya Raghunath at The Motley Fool Canada

If you are looking for a way to collect a steady, monthly income from the stock market without picking individual stocks, a high-quality real estate investment trust is one of the smartest tools available to Canadian investors.

And right now, RioCan Real Estate Investment Trust (TSX:REI.UN) stands out as one of the best options on the board.

Here is the bottom line: RioCan is a well-run, necessity-based retail REIT that pays you every single month, currently yields around 5.5%, and is backed by a portfolio of properties that Canadians visit frequently.

Why REITs belong in your portfolio right now

Before we get into the numbers, it helps to understand what makes REITs such a powerful tool for everyday investors.

A real estate investment trust pools money from multiple investors to own income-producing real estate. As a unitholder, you receive a share of the rental income those properties generate. You get exposure to real estate without needing to buy, manage, or finance a property yourself.

REITs also add meaningful diversification to a portfolio. Most Canadians are already heavily weighted toward banks and energy in their investment accounts.

A retail REIT like RioCan is tied to a completely different set of economic drivers, namely the daily shopping habits of millions of Canadians in the country’s largest cities.

RioCan’s numbers back up the confidence

RioCan was established in Ontario in 1993 and focuses on necessity-based retail in densely populated communities.

Tenants include Loblaw, Metro, Sobeys, Shoppers Drug Mart, and Dollarama, which are fairly recession-resistant.

According to the company’s Q4 2025 earnings call:

• Retail committed occupancy ended the year at 98.5%.
• Blended leasing spreads hit a record 21.1% for the full year, indicating that RioCan is renewing leases at rents meaningfully higher than tenants previously paid.
• The trust also reported same-property NOI growth of 3.6% for the full year, accelerating to 4.5% in Q4.

RioCan president and CEO Jonathan Gitlin put it plainly on the call: “We’re in the midst of a multiyear value creation phase underpinned by visible and sustained growth that we believe is not fully reflected in RioCan’s current unit price valuation.”

At current prices, RioCan units trade at roughly 12 times 2026 core funds from operations (FFO), 20% below its long-term average of 15 times.

CFO Dennis Blasutti noted on the call that the trust’s IFRS net asset value implies a multiple consistent with that of 15 times the historical average. In other words, the market appears to be pricing in a discount that the fundamentals do not support.

A leasing super cycle fuels the growth runway

Here is what makes RioCan interesting over the next several years.

Several long-term leases signed in the early 2000s are now expiring. Moreover, shorter leases negotiated during the pandemic are also maturing. RioCan has 10.1 million square feet of leases maturing over the next three years and is well-poised to benefit from a leasing super cycle.

New leases signed in 2025 averaged about $29.65 per square foot, roughly 28% above the trust’s overall average in-place rent. This gap represents meaningful embedded growth as older, lower-rent leases roll over to current market rates.

Management is guiding for a core FFO of $1.60 to $1.62 per unit in 2026. About 75% of that target is already contractually locked in through rent steps and previously signed leases, offering a high degree of visibility for income-focused investors.

The bottom line for income investors

RioCan is a steady, disciplined income machine anchored by the kinds of stores Canadians cannot afford to stop visiting.

The monthly distribution, the 5.5% yield, the near-full occupancy, and a clear multi-year runway for rental rate growth make this one of the more convincing passive income setups on the TSX right now.

If you want to put your money to work in real estate without the headaches of being a landlord, RioCan is worth a very close look.

The post A Nearly Ideal Monthly-Paying REIT With a 5.5% Yield appeared first on The Motley Fool Canada.

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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Dollarama. The Motley Fool has a disclosure policy.

2026