The Best Canadian REIT ETFs for Monthly Real Estate Income

A growing number of Toronto condo owners are underwater, and that’s before you even factor in the wave of buyers walking away from preconstruction deals because they can’t scrape together enough cash to close.

Forget 5% cap rates. Many landlords are lucky to break even right now. Add in a pullback in immigration, 7% nationwide unemployment, and softening rents, and the dream of earning easy monthly income from a downtown shoebox in the sky is looking more like a financial sinkhole.

But if you’re still hoping to collect a monthly paycheck from real estate investments, there’s a smarter, cleaner, and far more liquid option: Canadian REIT ETFs.

These funds give you exposure to a broad mix of income-producing real estate—retail, office, industrial, residential—and unlike rental properties, they pay you monthly without the headaches.

And yes, you can even hold them tax-free in a Tax-Free Savings Account (TFSA). Here are three I think are worth a look from Vanguard, iShares, and BMO.

Vanguard FTSE Canadian Capped REIT Index ETF (VRE)

VRE, in typical Vanguard fashion, is cheap. A 0.39% management expense ratio (MER) might not seem like a steal, but within the Canadian REIT ETF landscape, that’s as low as it gets for now.

The fund tracks the FTSE Canada All Cap Real Estate Capped 25% Index. That “25%” refers to a cap on how much weight any single company can have in the index, which is necessary given how top-heavy the real estate sector is on the TSX. Without this cap, the biggest players would dominate the entire ETF.

One quirk with VRE is its top two holdings: FirstService (16%) and Colliers (11%). These aren’t technically REITs. They’re real estate service firms that provide property management, brokerage, and related services. That means they don’t own property directly or pay out the kind of high yields REITs are known for.

After that, it’s the usual suspects—CAPREIT, RioCan, Chartwell, Granite—covering residential, retail, healthcare, and industrial segments. But the inclusion of non-REITs in the portfolio drags down the yield. VRE’s current payout is just 2.69%, which is only slightly higher than what you’d get from a GIC.

iShares S&P/TSX Capped REIT Index ETF (XRE)

XRE is one of the oldest and most established REIT ETFs in Canada. It launched back in October 2002 and now manages around $1.5 billion in assets.

The ETF tracks the S&P/TSX Capped REIT Index, which, like VRE’s index, imposes a cap to avoid overconcentration. But unlike VRE, XRE sticks to actual REITs. That means no real estate operating companies like Colliers or FirstService—just pure-play property owners.

Without those lower-yield service firms, the portfolio leans heavily on names like CAPREIT, RioCan, Granite, and Choice Properties. It’s still fairly top-heavy, with CAPREIT and RioCan making up 15% and 11% of the fund, respectively.

That purer exposure gives XRE a yield advantage. The 12-month trailing yield currently sits at 5.25%, which is quite competitive, especially for monthly income seekers.

The only real downside here is the fee. A 0.61% MER might’ve made sense in 2002 when mutual funds were charging 2%, but in 2025 it’s highway robbery. Then again, this is iShares Canada we’re talking about, so don’t hold your breath for a fee cut.

BMO Equal Weight REITs Index ETF (ZRE)

Neither VRE nor XRE are especially well-diversified, largely due to the way their indices are constructed. Even with a cap in place, the market-cap weighting still leads to heavy exposure to giants like CAPREIT and RioCan.

That’s why the pick I like most out of the big three is ZRE. This ETF tracks the Solactive Equal Weight Canada REIT Index, which is exactly what it sounds like.

With ZRE, each REIT gets the same weight, no matter the size. That not only improves diversification, but it also introduces a natural “buy low, sell high” effect as the fund rebalances.

ZRE charges the same high 0.61% MER as XRE, so if anyone at BMO ETFs is reading this, please consider cutting that. Still, the yield is solid at 4.89%, and like the others, distributions are paid monthly.