Discovering a Canadian dividend inventory that pays dependable month-to-month revenue is like discovering a faucet that drips money. Canadian actual property funding trusts (REITs) are naturally constructed for this function. However when a REIT yields 8.4% and trades at a 40% low cost to its internet asset worth (NAV), it’s solely pure to ask: What’s the catch?
Let’s dig into Nexus Industrial REIT (TSX:NXR.UN), a high-yield dividend funding that has passive revenue hunters buzzing and worth seekers scratching their heads in 2026.
A month-to-month dividend payer with an 8.4% yield
Nexus Industrial REIT owns 89 business properties spanning 12.9 million sq. ft of gross leasable space. Just one property sits in improvement; the opposite 88 are actively amassing hire, each month.
By regulation, REITs should distribute roughly 90% of taxable revenue to unitholders to take care of their tax-exempt standing. To keep away from a lumpy year-end payout, trustees elect to distribute rental revenue month-to-month. That makes REITs like Nexus a pure match for buyers in search of common month-to-month passive revenue streams they’ll depend on.
The belief accomplished its transformation right into a pure‑play industrial REIT in 2025 after shedding retail belongings and an workplace property for $71.3 million. 5 improvement tasks completed in the course of the 18 months to November 2025 are actually contributing to the highest line. Right now, Nexus Industrial REIT’s distributions yield 8.4% paid month-to-month — a tempting proposition in any inventory market.
Is the Canadian REIT’s juicy yield protected?
Right here’s the place Nexus Industrial REIT’s yield providing will get sophisticated.
The REIT’s normalized adjusted funds from operations (AFFO) payout ratio landed at 104% over the primary 9 months of 2025. Which means the belief paid out extra in distributions than it generated in sustainable distributable money move. Through the third quarter, that determine spiked to 107.1%.
Any payout ratio above 100% is a yellow flag. However administration insists the present distributions are sustainable, and the numbers present modest enchancment. The 104% studying compares favourably to 109.1% throughout the identical interval in 2024.
What provides administration confidence? It’s sturdy leasing exercise. Through the third quarter of 2025, Nexus accomplished lease renewals at a 13% unfold to expiring rents and leased new house at a staggering 60% mark‑to‑market uplift. Industrial occupancy climbed 100 foundation factors to 96%, with room to enhance in 2026.
The belief has 765,000 sq. ft expiring this yr, half of which comes due in the course of the first 9 months. Crucially, tenants are already lined up for 90% of that house. Embedded hire steps and optimistic renewal spreads ought to steadily raise internet working revenue and, by extension, AFFO.
Add a pending funding‑grade credit standing (focused for late 2026) that would decrease curiosity prices, and the trail to a sub‑100% payout ratio turns into seen, if not assured.
Why the economic REIT trades at a 40% low cost
Nexus models lately modified arms at $7.70, but the newest internet asset worth (NAV) per unit stood at $12.98. That’s a 40% low cost to the appraised truthful worth.
In regular situations, such a large low cost alerts deep misery. However NAV is a snapshot of property values minus debt; it isn’t the identical as liquidation worth. Market sentiment, notably towards curiosity‑delicate belongings, have hammered REIT multiples since 2022. Nexus carries floating‑charge publicity, amplifying the ache whereas AFFO payout charges ranged in harmful territory.
Buyers are successfully pricing in a everlasting impairment that the underlying fundamentals don’t appear to assist. Industrial actual property stays wholesome, occupancy is excessive, and hire spreads are optimistic as lease renewals trickle in in 2026. An investment-grade credit standing this yr could possibly be a valuation catalyst to the upside.
The Silly backside line
Nexus Industrial REIT isn’t a set‑it‑and‑neglect‑it holding but. An AFFO payout ratio north of 100% calls for respect, and distribution cuts stay a non‑zero threat. But administration’s confidence, backed by seen leasing momentum, a transparent natural development runway, and a reputable path to funding‑grade standing, suggests the 8.4% yield is extra sturdy than the payout ratio alone implies.
For revenue buyers keen to tolerate some volatility and a watchful eye on quarterly AFFO, the 40% NAV low cost gives a real margin of security. In case you are in search of excessive month-to-month revenue and might deal with above-average volatility, NXR.UN deserves a spot in your watchlist – or perhaps a small starter place.