When it comes to investing in dividend stocks, there is something that clearly every investor tends to focus on. That’s the dividend yield. Granted, a high yield can certainly be awesome with the right stock — one that has a future outlook that looks quite strong.
However, the reverse can be true. A high dividend yield can show up when a company has been performing poorly. That’s why today, we’re going to look at one dividend stock doing well, with a chance at even more large returns in the future.
Granite REIT
Granite REIT (TSX:GRT.UN) is one of the best monthly dividend stocks money can buy. The dividend stock owns a portfolio of industrial, warehouse, logistics, and distribution properties across North America and Europe. These are strategically located near large urban centres, with a diverse range of industries. These include everything from e-commerce, of course, to manufacturing and transportation.
What’s more, these are tenants that provide a mix of national and international corporations. Companies that aren’t looking to suddenly pack up and leave. This has led to stable recurring revenue for the dividend stock and its rental revenue.
What’s more, the dividend stock continues to be in high demand when it comes to growth. Like many real estate investment trusts (REITs), Granite REIT acquires new properties to align with investment criteria. This has been quite easy, given the stable and increasing demand for these industrial properties.
Seen through earnings
This was demonstrated through the dividend stock’s most recent earnings. Granite REIT reported strong net operating income (NOI) of $110 million for the fourth quarter, up from $102.4 million the year before. Funds from operations (FFO) also increased compared to 2022 levels.
Furthermore, average rental rate spreads increased by a whopping 24% over expiring rents in the fourth quarter. This was also supported by a significant number of completed renewals.
And more growth is on the way, with Granite REIT completing a modern distribution facility, and signing a lease for an expansion property as well. Yet, if you’re worried about debt, the company managed to repay outstanding debentures and engaged in share repurchases. Overall, the dividend stock looks incredibly strong.
Outlook
So, what about the future? As we’ve seen, this has already involved expansion of properties as well as acquisitions. However, the dividend stock did outline specific guidance for the future.
This included for 2024, with Granite REIT forecasting FFO to increase by 7-10% per unit over 2023 levels. This would be driven primarily by foreign exchange rate assumptions as well as projected same-property NOI growth.
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For now, shares are a steal. Granite REIT is still down 5% in the last year. However, shares have climbed 24% since bottoming out at the end of October. And as mentioned, the dividend stock still offers a stable and strong dividend yield of 4.28%.
Therefore, investors seeking passive income through dividends and returns would certainly do well to consider Granite REIT — not just for the next year but far beyond as the entire industry expands.
