Investing in monthly dividend stocks is the only way to generate significant income, because bonds, GICs, savings accounts, and other traditional sources of income yield next to nothing these days. With this in mind, let’s take a quick look at two income stocks with yields over 6% that you could buy today.
Summit Industrial Income REIT
Summit Industrial Income REIT (TSX:SMU.UN) is one of the largest owners and managers of industrial properties in Canada. As of February 28, its portfolio consists of 55 properties located across Ontario, Quebec, Alberta, British Columbia, and New Brunswick that total approximately 5.6 million square feet of gross leasable area.
Summit pays a monthly distribution of $0.042 per unit, representing $0.504 per share on an annualized basis, and this gives its stock a yield of about 7.8% today.
A 7.8% yield may have you salivating already, but you should also make the following two notes about Summit’s distribution.
First, it has paid monthly distributions since it initiated its distribution in March 2013, and it has maintained its current monthly rate since May 2014, meaning it’s a very reliable income provider.
Second, I think Summit’s continued growth of funds from operations (FFO), including its 0.9% year-over-year increase to $0.593 per unit in 2015 and its 2.9% year-over-year increase to $0.61 per unit in 2016, and the ongoing improvement of its FFO payout ratio, including 82.6% in 2016 compared with 85% in 2015, will allow it to continue to maintain its current monthly distribution rate for the foreseeable future.
First National Financial Corp.
First National Financial Corp. (TSX:FN) is the parent company of First National Financial LP, which is Canada’s largest non-bank originator and underwriter of mortgages, and it’s one of the top three in market share in the mortgage distribution channel.
First National currently pays a monthly dividend of $0.154167 per share, representing $1.85 per share on an annualized basis, which gives its stock a yield of approximately 6.9% today.
First National may have a lower yield than Summit Industrial Income REIT, but it’s very important to make the following two notes.
First, its two dividend hikes in the last 12 months, including its 8.8% hike in February, have it positioned for 2017 to mark the sixth consecutive year in which it has raised its annual dividend payment, making it both an income and dividend-growth play.
Second, I think First National’s accelerated growth of net income attributable to common shareholders, including its 5.6% year-over-year increase to $102.47 million in 2015 and its 91.8% year-over-year increase to $196.53 million in 2016, and its greatly improved dividend-payout ratio, including 50.3% of its net income in 2016 compared with 88.3% in 2015, will allow its streak of annual dividend increases to continue in 2018 and beyond.
Which would fit best in your income portfolio?
Summit Industrial Income REIT and First National Financial would make great additions to any income portfolio, so take a closer look and strongly consider investing in at least one of them today.
