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Monthly Dividend Stock In Focus: Canadian Apartment Properties Real Estate Investment Trust


Published on March 31st, 2025 by Felix Martinez

Investing in real estate investment trusts, or REITs, can be a fruitful option for investors seeking high-income yields. This is due to their obligation to distribute the majority of their profits to shareholders in the form of dividends. Many income-focused investors, particularly retirees, find REITs appealing but usually focus on the U.S.-based ones.

Exploring opportunities beyond the U.S. market may be wise, as reliable dividend-paying REITs exist in other countries. Canada, in particular, features several REITs that boast decades of consistent shareholder value creation. Canadian Apartment Properties Real Estate Investment Trust (CDPYF) is one such company.

Canadian Apartment Properties REIT stands out among other REITs because it offers monthly dividend payments, whereas most REITs provide dividends quarterly.

While a few other REITs also offer monthly dividends, this distinguishing feature sets Canadian Apartment Properties REIT apart from the pack. This is especially true in this case, as the company has paid a monthly dividend consistently since 1998 and has never cut it despite the hardships that have arisen since.

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Canadian Apartment Properties REIT offers a dividend yield of more than 3.6% at current prices, which is notably higher than the broad market’s dividend yield, which stands at about 1.4% right now.

The above-average dividend yield and Canadian Apartment Properties monthly dividend payments make the REIT worthy of research for income investors. This article will discuss the investment prospects of Canadian Apartment Properties (in short, CAPREIT) in detail.

Business Overview

CAPREIT is Canada’s largest real estate investment trust. The company owns approximately 45,154 suites, including townhomes and manufactured housing sites, in Canada. Further, the company, directly and indirectly, owns a 66% equity stake in European Residential Real Estate Investment Trust, another publicly traded Canadian REIT. The company also owns approximately 6,900 suites in the Netherlands through this investment.

In total, CAPREIT manages approximately 64,155 of its owned suites in Canada and the Netherlands and, additionally, approximately 3,800 suites in Ireland.

Source: Investor Presentation

The company reported strong financial results for Q4 and FY 2024, with operating revenue increasing to $1.11 billion (up from $1.07 billion in 2023) and net operating income (NOI) rising to $730.7 million (from $692.8 million). Same-property NOI increased 6% to $594.6 million, while the NOI margin improved to 65.7%. Diluted Funds From Operations (FFO) per unit grew 5.8% to $2.53, with distributions per unit increasing 3% to $1.47. Despite a net loss of $48.8 million in Q4, full-year net income rebounded to $292.7 million, compared to a $411.6 million loss in 2023.

CAPREIT’s portfolio saw significant adjustments, reducing total suites and sites from 64,260 to 48,696 due to $2.5 billion in non-core asset sales. The company divested 16,859 suites and sites, including a $715 million sale of manufactured home communities (MHC) and a $1.1 billion sale of 3,179 units in the Netherlands. Despite these sales, CAPREIT acquired 1,286 suites in Canada for $669.7 million. Occupancy declined slightly in the Canadian portfolio to 97.5% (from 98.8%), while average monthly rent increased 6% to $1,636.

Financially, CAPREIT strengthened its position with a reduced debt-to-gross book value of 38.4% (from 41.6%) and a 3.11% weighted average mortgage interest rate. Liquidity increased to $688.2 million, including $565.3 million in borrowing capacity. The company repurchased 7.3 million Trust Units for $327.1 million and raised distributions 3% to $1.50 per unit in August 2024, with another 3% increase to $1.55 planned. NAV per unit increased to $55.50 from $54.23, reinforcing CAPREIT’s strategic shift toward a stronger, more focused core portfolio.

Growth Prospects

Moving forward, we expect CAPREIT to drive growth through accretive acquisitions and organic rent growth, as it has done in the past.

Management believes that acquiring newly built properties should be a favorable strategy these days, as such properties should reduce the company’s future capital investment needs and, therefore, its exposure to inflationary pressures.

Source: Investor Presentation

Like all REITs, CAPREIT taps into both debt and equity markets to finance its future growth. As interest rates are now higher, one valid concern investors could have is the potential challenges to the company’s expansion efforts due to financing becoming notably more expensive lately. Despite this, CAPREIT has established an impressive credit profile over the years, which allows it to access financing at highly competitive rates.

CAPREIT’s improved its financial position in 2024, reducing total debt to gross book value to 38.4% (down from 41.6% in 2023). This was driven by $2.5 billion in non-core asset sales, which helped lower leverage and focus on high-quality properties. The company maintained a strong liquidity position of $688.2 million, including $565.3 million in available borrowing capacity.

CAPREIT’s strategic sales included a $1.1 billion divestiture of 3,179 units in the Netherlands and a $715 million sale of manufactured home communities (MHCs) in Canada. Despite these disposals, CAPREIT continued expanding its core portfolio, acquiring 1,286 suites in Canada for $669.7 million.

The company’s balance sheet remains solid, with a weighted average mortgage interest rate of 3.11% and a focus on maintaining a sustainable debt structure while growing its high-performing assets.

Dividend Analysis

CAPREIT boasts an impressive track record of paying monthly dividends for 26 consecutive years. Most importantly, the company never had to cut its dividend, even during challenging times like the Great Financial Crisis and the COVID-19 pandemic, when most REITs struggled significantly.

Except for the years between 2004 and 2011, when the dividend remained stable at C$1.08 annually, CAPREIT has consistently increased its dividend every other year during its 26-year history.

Although the current annual rate of C$2.09 yields just over 3.6%, which is below average for the sector and somewhat underwhelming given today’s interest rates, we remain highly confident in CAPREIT’s dividend safety. Not only has the company proven its resilience in harsh economic conditions, but with a comfortable NFFO payout ratio of 70%, there is ample room for future hikes and no concerns about potential cuts.

Final Thoughts

CAPREIT is one of Canada’s most reputable REITs, with a proven track record of growing its financials and dividends. The current macroeconomic climate may not align with its growth strategy, we predict that CAPREIT will fare better than its peers in the face of rising interest rates.

Overall, while CAPREIT’s yield is not sizeable, the stock is likely to continue satisfactorily serving income-oriented investors who seek a predictable payout. After all, the company’s number one objective is long-term, stable, and predictable monthly cash dividends.

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.

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