Dividend-paying stocks are excellent investments for investors seeking passive income. Thankfully, the TSX has several fundamentally strong stocks that have been consistently paying and increasing dividends for decades, making them dependable investments to start a passive income stream.
While the Canadian stock market has several top-quality income stocks, I’ll focus on a company that offers monthly payouts. This Canadian stock offers a lucrative dividend yield of 8% near the current levels.
A top monthly dividend stock
Speaking of top monthly dividend stocks, SmartCentres Real Estate Investment Trust (TSX:SRU.UN) stands out for the durability of its payouts and attractive yield. This real estate investment trust (REIT) distributes most of its earnings. Moreover, SmartCentres owns a high-quality real estate portfolio that drives its net income and funds from operations (FFO), supporting its monthly payouts.
SmartCentres currently pays a monthly dividend of $0.154 per share, translating into a yield of over 8% based on its closing price of $22.92 on May 22.
Why is SmartCentres REIT an attractive dividend stock?
SmartCentres REIT stands out as an attractive dividend bet due to its compelling yield and the reliability of its monthly distributions. The firm’s monthly distributions are well covered by a resilient real estate portfolio consistently generating solid same-property net operating income (NOI) and FFO.
It’s worth noting that SmartCentres had ownership interests in 193 properties as of March 31, 2024, including 155 retail properties. The higher concentration of retail properties acts as the anchor to its cash flows and supports its occupancy rate. This, in turn, drives its payouts.
Moreover, strong leasing interest for both existing and new builds indicates that the company’s occupancy rate will likely improve from current levels. Furthermore, there’s growing demand for the company’s portfolio, which augurs well for growth as it indicates positive market dynamics.
SmartCentres has strong tenant retention rates. Moreover, the REIT has a top-quality tenant base, including leading retailers like Walmart. Further, it benefits from a high cash collection rate. In addition, its lease extensions or renewals come with strong rental increases, which will boost cash flows.
The REIT’s retail properties add stability and support its cash flows. Meanwhile, the development of mixed-use properties opens up new avenues of growth. With a solid pipeline of mixed-use projects and an underutilized land bank, the firm is well-positioned to consistently generate resilient income and grow FFO, which will enable it to enhance its shareholders’ value through regular monthly payouts.
Additionally, the REIT’s 81% of debt is fixed-rate. This higher mix of fixed-rate debt provides insulation against the prolonged high-interest rate environment. Further, it is deleveraging its balance sheet, which augurs well for future growth.
Bottom line
SmartCentres’ top-quality real estate portfolio, strong demand, higher leasing and renewal activity, and solid occupancy and retention rate position it well to generate resilient income and FFO. In summary, SmartCentres is well-positioned to consistently enhance its shareholders’ returns through monthly cash dividends.
The table below shows that by purchasing 1,000 shares of SmartCentres REIT, investors can earn $154 in monthly cash.
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
| SmartCentres REIT | $22.92 | 1,000 | $0.154 | $154 | Monthly |
