What is the best Canadian REIT for retirement income?

There is no single best pick — it depends on whether you want maximum income now or growing income over time. For dividend growth and safety, Granite REIT (GRT.UN) is the standout with 15 consecutive years of distribution increases and an AFFO payout ratio under 70%. For high current income, CT REIT (CRT.UN) offers around 5.9% yield with a 99.5% occupancy rate and a dividend raised every year since its IPO. A blend of 4–5 REITs across sectors is the most reliable retirement strategy.

Should I hold REITs in my TFSA or non-registered account?

Hold REITs in your TFSA or RRSP. REIT distributions are not eligible for the Canadian dividend tax credit — they are a mix of income, return of capital, and sometimes capital gains. In a non-registered account, this creates a complicated tax situation. Inside a TFSA, all distributions are received tax-free, which makes the compounding math significantly more powerful over a long retirement.

What is the difference between XRE and buying individual Canadian REITs?

XRE (iShares S&P/TSX Capped REIT Index ETF) gives you exposure to 19 Canadian REITs in a single trade with no research required. The downside is a 0.61% MER that creates meaningful fee drag over time — over the last ten years, XRE returned 5.05% annualized versus its index at 5.68%, with most of the gap coming from fees. Individual REITs have no MER and typically offer higher yields. If you are willing to monitor 4–6 holdings, picking your own REITs is the better long-term income strategy.

What is a good dividend yield for a Canadian REIT?

A healthy REIT yield in Canada typically falls between 4% and 7%. Yields below 4% are usually low because the REIT prioritizes distribution growth over current income (like Granite REIT or CAPREIT). Yields above 7–8% warrant extra scrutiny — a high yield can signal a stressed payout ratio, declining unit price, or unsustainable distributions. Always check the AFFO (Adjusted Funds From Operations) payout ratio alongside the yield. A payout ratio under 85% is generally considered safe for a REIT.

Do Canadian REITs pay monthly dividends?

Yes, the majority of Canadian REITs pay monthly distributions, which makes them particularly well-suited for retirement income. REITs covered in this article that pay monthly include Granite REIT (GRT.UN), CT REIT (CRT.UN), SmartCentres REIT (SRU.UN), Dream Industrial REIT (DIR.UN), RioCan REIT (REI.UN), Choice Properties (CHP.UN), Crombie REIT (CRR.UN), Nexus Industrial REIT (NXR.UN), and CAPREIT (CAR.UN). Nexus Industrial specifically pays on the 15th of every month.

Are grocery-anchored REITs safe investments in Canada?

Grocery-anchored REITs are considered among the most defensive real estate investments available. Choice Properties REIT (CHP.UN), anchored by Loblaws, and Crombie REIT (CRR.UN), anchored by Sobeys and Empire Company, both benefit from tenants that generate consistent foot traffic regardless of economic conditions. Grocery is resistant to both recessions and e-commerce disruption, making these REITs reliable income sources for retirement portfolios.

What is an AFFO payout ratio and why does it matter for REIT investors?

AFFO stands for Adjusted Funds From Operations — it is the standard measure of a REIT's true cash earnings after maintenance costs. The AFFO payout ratio tells you what percentage of that cash is being paid out as distributions. A ratio under 85% means the distribution is well-covered and has room to grow or absorb a revenue dip. A ratio above 95% means there is very little cushion — any tenant loss or rate increase could force a distribution cut. Granite REIT's AFFO payout ratio of around 66% is the gold standard in Canada. Always check this number before investing in any REIT for income.

30 Apr 2026 7 min read Investing

10 Canadian REITs for Retirement Income in a TFSA (2026 Edition)

Although we are in our late 30s, and soon to be 40, I have been aiming for an early retirement since I was 19 when I realized the corporate world is not for me. As I am getting closer to realizing this dream, I am working on a dividend stream. What better way to have a consistent monthly income than an REIT, utility, a bank, or similar. I have been using XRE and XEI as a vehicle for my monthly dividends but the high MER has me considering having a mix of individual REITs that mirror the ETFs. For this post, I used Claude to give me a quick and simple analysis of 10 Canadian REITs.

Note to readers - a portion of this post was written by Claude but formatted by a human. I have kept references where and how they were provided giving credit to the source.

The goal is to buy and hold a mix of these REITs in my TFSA. A quick note on why REITs belong in a TFSA specifically - REIT distributions are not eligible for the Canadian dividend tax credit. They're made up of a mix of income, return of capital, and sometimes capital gains. That's why many investors prefer to hold REITs inside a TFSA or RRSP, where the tax treatment is much cleaner.

1. Granite REIT (TSX: GRT.UN), ~3.9% yield - The gold standard for dividend safety. Granite is a rare breed in the Canadian REIT asset class - a dividend growth stock with 15 consecutive years of distribution increases. Its AFFO payout ratio has stayed in the 65–70% range over the past three years, leaving significant room for continued distribution growth. Its international portfolio of light industrial and logistical properties, over 50% in the US and roughly 25% in Europe, is highly desirable in today's e-commerce economy. The yield is lower than peers, but the safety and growth record are unmatched. (Sources - The Motley Fool, Wealth Awesome)

2. Choice Properties REIT (TSX: CHP.UN), ~5% yield - Choice is one of the most reliable Canadian REITs because a massive portion of its portfolio is anchored by grocery stores, which is about as defensive as it gets. Regardless of what's happening in the economy, people still need to buy food, fill prescriptions, and handle basic necessities. With a market value of over $9.5 billion and 704 properties across retail, industrial, and residential assets, it's the largest REIT in Canada. (Sources - The Motley Fool Wealth Awesome)

3. CT REIT (TSX: CRT.UN), ~5.9% yield - CT REIT owns 377 income-producing properties totaling 31.2 million square feet, with Canadian Tire occupying roughly 90–93% of the portfolio. Long-term lease agreements averaging 7.5 years and a 99.5% occupancy rate give it a highly stable revenue base. Since going public just over a decade ago, CT REIT has increased its revenue, funds from operations, and dividend every single year, including during periods when many retail REITs struggled. Analysts project roughly 3% annual dividend growth continuing through 2026. (Sources - The Motley Fool Canada, The Motley Fool Canada)

4. SmartCentres REIT (TSX: SRU.UN), ~6.5–8% yield - SmartCentres reported a 98.6% occupancy rate in its most recent updates, anchored mostly by Walmart. Its AFFO payout ratio improved to approximately 89.2% for full-year 2025, and with a robust pipeline of mixed-use developments and a 99% cash collection rate, the distribution appears safe and well covered. High yield, low growth - a pure income play rather than a compounder. Unlike some peers, SmartCentres kept its dividend payout throughout the pandemic, which says a lot about tenant quality. (Sources - The Motley Fool Tawcan)

5. Dream Industrial REIT (TSX: DIR.UN), ~5.6% yield - Dream Industrial boasts a solid portfolio of 322 properties worth over $7.9 billion spread across Canada, the US, and Europe. For REITs like Dream Industrial that have high-quality assets strategically positioned close to city centres, the distribution and warehouse facilities funding e-commerce growth trends are essentially backed by this REIT. A strong pick if you want industrial exposure with a healthy yield. (Sources - Wealth Awesome Yahoo!)

6. RioCan REIT (TSX: REI.UN), ~6% yield - RioCan owns, manages, and develops retail-focused, mixed-use properties in prime, high-density transit-oriented areas. Its necessity-based retail strategy, including grocery stores and pharmacies making up 20% of annualized rent, is buoyed by strong tenants like Walmart and Costco. It also has a pipeline of roughly 21 million square feet zoned for future development, giving it long-term upside beyond just dividends. (Source - Sure Dividend)

7. Crombie REIT (TSX: CRR.UN), ~5.5% yield - A significant portion of Crombie's portfolio is anchored by Sobeys Inc., a wholly-owned subsidiary of Empire Company. Grocery is recession-resistant, e-commerce-resistant, and generates consistent foot traffic. This is arguably the strongest anchor profile in Canadian retail REITs. Very similar thesis to Choice Properties but with a different grocery anchor, making them good complements if you want diversification within the grocery-anchored space. (Source - Stocktrades.ca)

8. Killam Apartment REIT (TSX: KMP.UN), ~3.5 – 4% yield - Killam has a portfolio of about 19,133 apartment units, 5,975 manufactured home community sites, and 0.95 million square feet of commercial area worth about $5 billion. It's the largest apartment owner in New Brunswick and Halifax, allowing significant control over rental trends in those markets. Canada's housing shortage and continued immigration make residential REITs a compelling long-term hold. Lower yield, but strong fundamentals. (Source - Wealth Awesome)

9. Nexus Industrial REIT (TSX: NXR.UN), ~7.9% yield - Nexus is a Canada-focused industrial REIT that owns 89 properties comprising 12.4 million square feet, with 99% of net operating income from industrial assets. The portfolio spans Ontario, Alberta, Saskatchewan, Québec, and Western Canada, with committed occupancy of 96% and a weighted average lease term of 6.9 years. The yield is the highest on this list among the more reliable names. Like clockwork, Nexus pays out distributions on the 15th of every month. Smaller and less diversified than the giants, but a solid income machine. (Sources - Sure Dividend The Motley Fool)

10. Canadian Apartment Properties REIT / CAPREIT (TSX: CAR.UN), ~3% yield - CAPREIT is Canada's largest publicly traded provider of quality rental housing, owning approximately 45,000 residential apartment suites and townhomes across Canada and the Netherlands. The yield is the lowest here, but CAPREIT is about as defensive as residential real estate gets. Canada's housing shortage isn't going away, and CAPREIT is positioned to benefit for decades. (Source - Savvy New Canadians)

General Takeaways

This quick AI analysis is what I was looking for. Hope you also find it useful. Sure, I could have compiled the above myself but this gives me a quick starting point.

Based on the above, I am thinking of pursuing a mix of 3-5 REITs across retail, grocery, residential and industrial. I already have SmartCentres so I am thinking of adding Dream or Nexus next, followed by RioCan, followed by Choice and Killam. More on each in later posts.

10 Best Canadian REITs for Retirement Income in Your TFSA (2026)

General Takeaways

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