Investing in monthly dividend stocks provides a regular and predictable income stream. This could benefit investors like retirees who rely on investments to cover their expenses. Moreover, these stocks are also a compelling bet for investors seeking consistent passive income.
While dividend-paying stocks focus on returning substantial cash to their shareholders, many of them also offer the potential for long-term capital gains. This means that, in addition to receiving regular income, your investments could grow in value over time.
Thankfully, the TSX has several fundamentally strong stocks that pay monthly dividends. Moreover, a few of them offer lucrative and well-protected yields. One among them is SmartCentres Real Estate Investment Trust (TSX:SRU.UN). As REITs (real estate investment trusts) are obligated to distribute most of their earnings, they emerge as a solid investment option to generate regular cash.
Much like its peers, SmartCentres also has a high payout ratio. Meanwhile, it continues to enhance its shareholders’ returns through regular monthly dividend distributions. Furthermore, the REIT offers a compelling yield of 8.3% (based on its closing price of $22.14 on November 1).
Against this backdrop, let’s delve into the factors to understand why SmartCentres is a reliable investment choice for investors looking for a dependable monthly income and high yield.
SmartCentres: A compelling monthly income stock
SmartCentres stands as Canada’s leading fully integrated REIT. It owns resilient real estate assets that drive its adjusted funds from operations (AFFO) in all market conditions. For instance, SmartCentres boasts a portfolio of 189 properties, encompassing 155 retail properties. These assets are strategically situated in prominent communities across Canada. Overall, SmartCentres commands an impressive 34.9 million square feet of gross leasable mixed-use space, which drives its financials and stock price.
What sets SmartCentres apart is its top-notch tenant base and high occupancy rate. Notably, 65% of its tenants provide essential services, while an impressive 95% of its tenants are either national or regional retail brands. For instance, some of its top tenants include Walmart, Metro, Loblaw, and Dollarama. Investors should note that SmartCentres generates most of its cash from Walmart.
Its solid tenant base stabilizes its cash flows and enables the company to maintain a high occupancy rate. It’s worth highlighting that SmartCentres boasts an industry-leading occupancy rate of approximately 98.2%. This is driven by increasing demand for high-traffic shopping centres anchored by Walmart and other prominent grocers and retailers.
In summary, SmartCentres’s robust recurring retail income, emphasis on expanding mixed-use properties, solid balance sheet, and high occupancy rate position it well to generate solid AFFO and bolster its shareholders’ returns via regular monthly dividend payments. Additionally, SmartCentres could easily navigate the rising interest rate environment as approximately 83% of its debt is of a fixed rate.
Bottom line
SmartCentres offers a monthly dividend payout of $0.154 for each share. With an investment of approximately $12,000, investors can acquire roughly 542 shares of SmartCentres REIT near the current levels. This translates to a potential monthly dividend income of $83.47 for those who own its 542 shares.
