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9.2% Stock Goes Ex-Dividend Friday

This is your last chance to collect the upcoming dividend disbursement on a safe stock that yields over 9%.

That’s right. This company is gushing so much cash, it pays more than TRIPLE the dividend of your typical blue chip stock.

However, if you want to collect this 9% dividend, then you have to act fast. The next round of distributions are scheduled to be mailed out in a few weeks.

Collect a 9.2% ‘rent cheque’ without becoming a landlord

Real estate is a great business. These wonderful people called bankers lend you all the money you need to invest. Then these nice folks called tenants pay off your mortgages.

In 25 years or less, you own the properties free and clear. However, your tenants continue to pay you rent. But while we could all use the extra cash, buying rental properties is not for everybody.

Everyone has heard those landlord horror stories. Not to mention the daily hassles of shoveling driveways, fixing leaky faucets, and chasing down rent cheques. Owning real estate is no cake walk.

That’s why you might be interested to learn about a way to collect monthly rental income without becoming a landlord. I’m talking about becoming a partner with an already established property owner: Dream Office REIT  (TSX: D.UN).

As regular readers know, real estate investment trusts, or REITs, are a great source of rental income. A REIT is essentially a real estate holding company. It owns properties, collects rent from tenants, and passes on the income to unitholders.

Dream is one of my favourite names in this space. The trust’s business empire spans some 185 properties across Canada. Altogether, this portfolio totals some 24 million square feet, including some of the most valuable real estate in the country.

dream

Source: Dream Office REIT Investor Presentation

As a partner with this landlord, you never have to chase down rent from tenants. There are no deposits to collect or toilets to unclog. You just sit back and wait for the cheques to arrive in your mailbox.

But Dream is not your average landlord. The firm specializes in office properties, an area of the rental market usually off-limits to small investors. Needless to say, these tenants have a lot more ‘rent money’ than your typical household and always pay their bills on time.

And because of how this trust is legally structured, Dream pays NO corporate income taxes. Thanks to a loophole in the tax code, the trust is able to save millions of dollars each year. But in exchange for this benefit, the firm is also required by law to pass on all of its profits to partners.

This is how the trust has been able to pay out such oversized rent cheques. Since Dream started sending out distributions in 2003, the firm has never missed or lowered its total annual payments. Remember, this period included two major recessions.

Collect thousands in monthly rental income starting January 15

Today, Dream pays an annual distribution of 18.67 cents per unit, which comes out to a yield of 9.2%. However, that payout should grow as tenants renew their leases at higher rates.

Best of all, Dream pays its partners monthly. The next round of distributions are scheduled to be mailed out in a few weeks. If you become a partner by December 26, you can collect your first rent cheque on January 15. 

Our No. 1 stock pick

Dream is a great investment, but this company could be even better. Our top analyst has done his homework. Now he's recommending one income stock that has paid a dividend to shareholders every year since 1953.

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Fool contributor Robert Baillieul has no position in any stocks mentioned.

 

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