This makes the registered account suitable for income investors who can earn stable dividends and capital gains without paying taxes for life.
An example of such a monthly dividend stock that you can buy and hold in the TFSA is Automotive Properties REIT (TSX:APR.UN), which offers you a forward yield of 7.4% through December 2025.
Over the past ten years, the real estate investment trust has returned 191% to shareholders, after adjusting for dividend reinvestments. Let’s take a look at why it’s still a top buy for income investors today.
The bull case for the TSX dividend stock
Automotive Properties REIT is Canada’s only publicly traded REIT focused on consolidating automotive real estate and original equipment manufacturer (OEM) dealers.
The REIT operates, owns and acquires income-producing automotive dealerships and service properties in Canada and the United States.
The portfolio consists of 91 commercial properties with a gross lettable area of 3.4 million square meters, spread over 300 hectares. These properties are located in urban centers along major transportation routes with high visibility.
Notably, the properties are located in areas explicitly designated for automotive retail use, making them defensive assets integral to automotive brands’ distribution networks.
Canadian automotive retailing will generate approximately $219 billion in 2024, accounting for 27% of total retail sales in Canada. In addition, the REIT’s anchor tenant is the Dilawri Group, Canada’s largest auto dealer group, with combined 2024 sales of approximately $5.1 billion, representing virtually every major automotive brand. Dilawri maintains strategic alignment through its effective 30.8% stake in the REIT.
The portfolio has a weighted average lease term of 8.8 years from September 2025. Most leases are triple-net structures with tenants covering maintenance, taxes, insurance, utilities and non-structural capital improvements. All rental agreements include fixed or CPI-linked (consumer price index) rental escalators, ensuring consistent revenue growth.
The REIT pays monthly distributions of $0.0685 per unit, or $0.822 annually. The management consists of CEO Milton Lamb, with more than 25 years of experience in commercial real estate, and CFO Andrew Kalra, with more than 20 years of financial experience, including 14 years in the automotive sector.
A strong performance in the third quarter of 2025
Automotive Properties REIT delivered solid results in the third quarter, deploying more than $150 million across 11 properties. The REIT completed purchases totaling $93.6 million for seven automotive properties during the quarter, including five dealership and collision centers in Greater Montreal and a Rivaanstenant facility in Orlando.
Another four properties in the Montreal area closed after the end of the quarter for $57.3 million, marking the company’s most active period of expansion since going public a decade ago.
In the third quarter, rental income increased 7.9% year over year to $25.4 million. Net operating income increased by 6.5%, while net operating income for the same property increased by 2.3%. Funds from operations per share increased to $0.252, up 8.2% year over year, indicating a payout ratio of 82%.
Debt/gross book value was approximately 45% in mid-November, with 84% of debt fixed through interest rate swaps and mortgages at a weighted average interest rate of 4.4%. Management proactively extended $29 million of floating-to-fixed swaps during the quarter for five- to six-year terms at interest rates below 4.6%, limiting interest rate exposure.
The REIT ended the third quarter with $7.5 million in cash and $9 million in unused credit capacity. In addition, eight unencumbered properties worth $117 million provide an additional liquidity cushion.
The growth story for Automotive Properties is far from over, given its entry into the US market and diversification into heavy equipment dealerships.
Given consensus price targets, TSX stock is trading at a discount of 13%. If we adjust dividends, the cumulative return could be closer to 21%.
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