The markets have struggled this year amid the COVID-19 pandemic. Among the worst hit have been retail stocks and real estate investment trusts (REITs). However, for opportunistic investors, it could be a great time to buy stocks in those sectors at cheap prices and also secure high yields.
SmartCentres Real Estate Investment Trust (TSX:SRU.UN) is a REIT that has a fair bit of exposure to retail with its portfolio including shopping centres across the country. But its shopping centres aren’t as vulnerable as many other shopping centres are, and that’s because of Walmart (NYSE:WMT).
The big-box retailer anchors about 75% of the REIT’s shopping centres. That’s crucial amid the COVID-19 pandemic because stores like Walmart are places where shoppers can make all their purchases and help minimize the need for them to go elsewhere.
It can also be easier to justify going to a nearby store since it won’t result in an extra trip, and that’s where other tenants in the shopping centre can benefit from Walmart’s presence, as can the REIT and its investors.
Shares of SmartCentres are down 33% this year. But despite all the pessimism, the REIT continues to show strength as on June 25 it announced it declared another monthly dividend of $0.15417.
Its payouts have remained unchanged since the pandemic began and investors who buy the stock today can earn a dividend yield of 9% per year.
That’s an incredible payout for the REIT and with payouts made on a monthly basis, it can be a terrific source of recurring cash flow. A $25,000 investment in the REIT could earn you $2,250 for the full year, which is $187.50 each month.
