For Monthly Income, a 5.9% Dividend Stock to Consider

Investors looking to build reliable passive-income streams for 2026 and beyond may discover that few sectors can match the steady, monthly rent cheques provided by Canadian Real Estate Investment Trusts (REITs). However, not all landlords are created equal. If you are looking for a combination of high-quality retail real estate and a dividend that is as sturdy as the bricks and mortar it’s built on, RioCan REIT (TSX:REI.UN) deserves a spot on your radar as it promises a 5.9% distribution yield, paid every month, for the next decade and beyond.

RioCan REIT has just released its fourth-quarter and full-year 2025 results on February 17, 2026, and its operating performance and occupancy and income growth numbers tell a story of a business that is hitting its stride despite the wider economic noise.

Retail real estate thrives: RioCan REIT distributes monthly income

Necessity-based retail hubs continue to thrive in Canada. RioCan REIT’s predominantly retail portfolio, of which 168 wholly owned properties comprising 31.4 million square feet of gross leasable area (GLA) is a prime example. The REIT entered 2026 with a strong committed occupancy rate of 97.8%, with its retail-specific assets showing higher occupancy levels at 98.5%. Retail space comprises 85.6% of RioCan REIT’s annualized rent, with a little (11.4%) office exposure and a growing mixed use and residential space.

Why is retail going strong? There’s still a shortage of well-located retail space in Canada’s major markets. Because RioCan owns some of the best corners in high-density areas, the trust isn’t just filling vacancies — it’s raising the rent.

In 2025, RioCan achieved double-digit leasing spreads, including a staggering 37.3% spread on new leases. Effectively, when a tenant leaves, the new one is paying significantly more. This pricing power drove Commercial Same Property Net Operating Income (SPNOI) growth of 3.6% for the full year, a critical metric for long-term investors, which shows the organic growth potential of the existing portfolio.

About 8.9% of RioCan’s net leasable area is due for re-leasing in 2026, followed by 12.7% in 2027. Higher contractual rents could lift revenue, operating income, and distributable cash flow higher to improve the monthly distribution’s safety.

RioCan’s distribution safety

The most important question posed by passive income seekers is: How safe is the monthly dividend? RioCan REIT’s monthly income distribution of $0.0965 per unit currently offers an annualized yield of approximately 5.9%.

The distribution looks healthy and sustainable with an adjusted funds from operations (AFFO) payout rate of 71.9% for 2025. AFFO measures a REIT’s most distributable cash flow from rentals, after accounting for recurring maintenance costs and straight-line rents. In the REIT world, AFFO payout rates below 100% are sustainable, and those below 80% are among the most conservative, highly sought, passive income streams. The current low AFFO payout ratio provides a massive cash flow cushion that allows the trust to maintain distributions even if the economy hits a temporary snag.

Furthermore, RioCan REIT is growing its cash flow. Over the past three years, the trust has seen consistent growth in its diluted FFO per unit, which rose to $1.87 for the full year 2025 (up from $1.78 in 2024 and $1.77 in 2023). This growth is fueled by a mix of rent hikes, new developments coming online, and an aggressive unit buyback program that increases the net asset value for remaining unitholders.

The long-term passive income and growth case

RioCan REIT’s distribution stability is further anchored by a long average lease term of 7.8 years. This means the bulk of its rental income is locked in with high-quality, necessity-based tenants (like grocery and pharmacy) for nearly a decade.

From a valuation perspective, RioCan units remain attractively priced. Trading at a price-to-FFO (P/FFO) of roughly 10.6 times, units sit well below historical valuation averages and trade at a 19% discount to their most recent net book value of $24.37 per unit.

A passive income investor’s takeaway

RioCan REIT offers a compelling passive-income investment proposal: high portfolio occupancy rates, a strong organic rent growth profile, and a well-covered monthly distribution payout supported by rising cash flows. If you’re looking for a reliable “set it and forget it” monthly income stock to buy in 2026, RioCan REIT is a blue-chip choice that may help pay regular monthly bills in retirement.

The post For Monthly Income, a 5.9% Dividend Stock to Consider appeared first on The Motley Fool Canada.

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More reading

• 2 Undervalued Bank Stocks and REITs Worth Buying in 2026
• RioCan vs SmartCentres: The Better REIT for Right Now
• 1 Canadian REIT Offering an Outstanding Yield
• 3 Top Canadian Stocks to Add to Your TFSA

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.