Traders seeking to construct dependable passive-income streams for 2026 and past could uncover that few sectors can match the regular, month-to-month hire cheques offered by Canadian Actual Property Funding Trusts (REITs). Nevertheless, not all landlords are created equal. If you’re searching for a mixture of high-quality retail actual property and a dividend that’s as sturdy because the bricks and mortar it’s constructed on, RioCan REIT (TSX:REI.UN) deserves a spot in your radar because it guarantees a 5.9% distribution yield, paid each monthfor the subsequent decade and past.
RioCan REIT has simply launched its fourth-quarter and full-year 2025 outcomes on February 17, 2026, and its working efficiency and occupancy and earnings progress numbers inform a narrative of a enterprise that’s hitting its stride regardless of the broader financial noise.
Retail actual property thrives: RioCan REIT distributes month-to-month earnings
Necessity-based retail hubs proceed to thrive in Canada. RioCan REIT’s predominantly retail portfolio, of which 168 wholly owned properties comprising 31.4 million sq. toes of gross leasable space (GLA) is a main instance. The REIT entered 2026 with a powerful dedicated occupancy charge of 97.8%, with its retail-specific belongings exhibiting increased occupancy ranges at 98.5%. Retail area contains 85.6% of RioCan REIT’s annualized hire, with a bit of (11.4%) workplace publicity and a rising blended use and residential area.
Why is retail going sturdy? There’s nonetheless a scarcity of well-located retail area in Canada’s main markets. As a result of RioCan owns a few of the greatest corners in high-density areas, the belief isn’t simply filling vacancies — it’s elevating the hire.
In 2025, RioCan achieved double-digit leasing spreads, together with a staggering 37.3% unfold on new leases. Successfully, when a tenant leaves, the brand new one is paying considerably extra. This pricing energy drove Industrial Identical Property Web Working Revenue (SPNOI) progress of three.6% for the complete yr, a important metric for long-term traders, which reveals the natural progress potential of the prevailing portfolio.
About 8.9% of RioCan’s internet leasable space is due for re-leasing in 2026, adopted by 12.7% in 2027. Increased contractual rents might raise income, working earnings, and distributable money stream increased to enhance the month-to-month distribution’s security.
RioCan’s distribution security
A very powerful query posed by passive earnings seekers is: How secure is the month-to-month dividend? RioCan REIT’s month-to-month earnings distribution of $0.0965 per unit at present gives an annualized yield of roughly 5.9%.
The distribution appears to be like wholesome and sustainable with an adjusted funds from operations (AFFO) payout charge of 71.9% for 2025. AFFO measures a REIT’s most distributable money stream from leases, after accounting for recurring upkeep prices and straight-line rents. Within the REIT world, AFFO payout charges under 100% are sustainable, and people under 80% are among the many most conservative, extremely sought, passive earnings streams. The present low AFFO payout ratio gives a large money stream cushion that enables the belief to keep up distributions even when the economic system hits a short lived snag.
Moreover, RioCan REIT is rising its money stream. Over the previous three years, the belief has seen constant progress in its diluted FFO per unit, which rose to $1.87 for the complete yr 2025 (up from $1.78 in 2024 and $1.77 in 2023). This progress is fueled by a mixture of hire hikes, new developments coming on-line, and an aggressive unit buyback program that will increase the web asset worth for remaining unitholders.
The long-term passive earnings and progress case
RioCan REIT’s distribution stability is additional anchored by a protracted common lease time period of seven.8 years. This implies the majority of its rental earnings is locked in with high-quality, necessity-based tenants (like grocery and pharmacy) for practically a decade.
From a valuation perspective, RioCan models stay attractively priced. Buying and selling at a price-to-FFO (P/FFO) of roughly 10.6 instances, models sit properly under historic valuation averages and commerce at a 19% low cost to their most up-to-date internet guide worth of $24.37 per unit.
A passive earnings investor’s takeaway
RioCan REIT gives a compelling passive-income funding proposal: excessive portfolio occupancy charges, a powerful natural hire progress profile, and a well-covered month-to-month distribution payout supported by rising money flows. For those who’re searching for a dependable “set it and overlook it” month-to-month earnings inventory to purchase in 2026, RioCan REIT is a blue-chip alternative that will assist pay common month-to-month payments in retirement.