Investors seeking steady passive income could consider investing in dividend stocks. The primary reason is that several fundamentally strong companies consistently pay and increase their payouts, even when the economy didn’t do well, thus returning higher cash to their shareholders.
For instance, companies like Fortis and Enbridge have been consistently growing their annual dividends for decades, regardless of the market conditions. Fortis has increased its dividend every year for 50 consecutive years, while Enbridge has done so for 29 years straight. This consistent performance makes these stocks appealing to people who want regular income from their investments.
While these stocks are undoubtedly solid income bets, I’ll focus on shares of a company that offers monthly payouts. It’s worth noting that monthly dividends give investors more control over their cash flow. They can reinvest the money, use it for bills, or put it into other investments as they see fit.
With this background, let’s look at a top Canadian stock that pays monthly dividends.
A 7.7 % dividend stock paying cash every month
SmartCentres Real Estate Investment Trust (TSX:SRU.UN) is a top stock on the TSX, offering monthly payouts. As a REIT (real estate investment trust), SmartCentres distributes most of its earnings as dividends, making it an appealing stock for investors seeking passive income.
In addition, its high-quality assets, strong fundamentals, compelling yield, and a consistent track record of paying dividends and occasionally increasing the same contribute to my positive outlook on the stock.
The REIT currently pays a monthly dividend of $0.154 a share, translating to a dividend yield of approximately 7.7% based on its closing price of $24.08 on February 25.
Why invest in SmartCentres REIT?
The top reasons to invest in SmartCentres stock are its compelling yield and commitment to return cash to its shareholders. Furthermore, the REIT’s payouts and high yield are well-protected by its resilient real estate portfolio that consistently generates strong same-properties NOI (net operating income) regardless of economic situations.
As of December 31, 2023, SmartCentres had ownership interests in 191 properties, including 155 retail properties. The higher mix of retail properties acts as the anchor to its cash flows and drives its occupancy rate, enabling the company to bolster its shareholders’ return.
SmartCentres REIT boasts a high-quality tenant base and a high occupancy rate of 98.5%. Further, SmartCentres has mostly fixed-rate debt, which makes it relatively immune to the higher interest rate environment.
While the REIT is poised to deliver stable cash flows and maintain high occupancy across its retail portfolio, it will likely benefit from the development of mixed-use properties. SmartCentres has a solid development pipeline of mixed-use properties and a significant underutilized land bank, which presents strong growth opportunities. Overall, the company is well-positioned to continue to generate resilient income and grow funds from operations to support sustainable dividend distributions.
Bottom line
Investors seeking monthly passive income could consider SmartCentres REIT as a top stock. Its high yield, well-covered payouts, and commitment to deliver sustainable dividend distributions make it an appealing investment. Further, based on its monthly payouts, investors can make $154 per month by acquiring 1,000 shares of SmartCentres REIT stock near the current levels.
