Two TSX REITs Offer High Yields at Bargain Valuations

The Toronto stock market has split into two camps this year. Some companies have climbed steadily higher, their share prices climbing double digits. Others have fallen hard—some to their lowest prices in a decade or more. But that gap between winners and losers is exactly where patient investors can find opportunity, especially if they're willing to hold and collect dividends while they wait.

NorthWest Healthcare Properties REIT trades on the TSX under the symbol NWH.UN, and it has become a textbook case of a beaten-down asset that still pays you to own it. The company invests in healthcare real estate around the world—hospitals, clinics, medical office buildings—the kind of properties that don't go out of fashion. But the stock has been punished. Shares are down 47 percent from their recent highs, a decline that accelerated when the company announced it would not proceed with a planned joint venture in the United Kingdom. The broader selloff, though, traces back further. During the pandemic, when healthcare properties were seen as essential and recession-proof, the stock soared. Once lockdowns ended and restrictions lifted, investors rotated out, and the share price followed them down.

Yet the fundamentals remain solid. NorthWest operates a geographically diverse portfolio of healthcare properties and continues hunting for expansion opportunities. The company maintains a 97 percent occupancy rate across its holdings, meaning nearly all of its buildings are generating rent. The leases average 14 years in length—long enough that dividend payments should remain stable even if economic conditions shift. Operating costs have risen, as they have everywhere, but the company is still collecting rent from tenants who have little choice but to pay. Today, with shares down so far, the dividend yield sits at 11.68 percent. That means if you buy in now, you'll collect more than 11 cents in annual dividends for every dollar you invest. And there's a hint of recovery already: shares have climbed 10 percent in just the last month.

SmartCentres REIT, trading as SRU.UN, operates a different kind of real estate. The company owns and manages retail properties across Canada, often anchored by major tenants like Walmart. It's a household name in Canadian shopping centers. But like NorthWest, SmartCentres has struggled this year. Rising operating costs and climbing interest rates have weighed on the stock, which is down 13.5 percent year-to-date.

What makes SmartCentres interesting is not just its current yield but its future direction. The company is building retirement communities—mixed-use developments where residents can live, shop, and dine without leaving the property. As Canada's baby boomer population ages, demand for these kinds of integrated communities is likely to grow for years. SmartCentres is positioning itself to capture that trend. The stock trades at just 13.74 times earnings, a modest valuation, and offers a 7.41 percent dividend yield. Like NorthWest, it's showing signs of recovery, with shares up about 5 percent over the past two months.

Both of these REITs share a common appeal: they're priced low enough that you're getting paid handsomely to wait for them to recover. An 11.68 percent yield from NorthWest or a 7.41 percent yield from SmartCentres means your money is working for you every quarter, every year, while the market eventually reprices these assets back toward fair value. For investors with a long time horizon—a decade or more—these are the kinds of stocks you can buy, hold, and let the dividends accumulate. The market has handed you a discount; the question is whether you'll take it.