Many dividend stocks out there pay terrific yields right now. The market crash that happened in March sent many stocks into the gutter, and not all of them have recovered. And for those businesses that are still doing well, investors have an opportunity to secure some great dividend income.
If you’re looking to supplement your income and make better use of your money than putting it into a low-interest savings account at your local bank, investing in a dividend stock can be a great idea.
One stock in particular that you should be keeping an eye one is Inovalis Real Estate Investment Trust (TSX:INO.UN). The real estate investment trust (REIT) has properties in France and Germany, which could make an important stock to hold in your portfolio.
In addition to dividend income, you can add some valuable geographical diversification to help minimize your exposure to North America.
Great source of monthly cash flow
Inovalis pays investors a monthly dividend of $0.06875. For a total year, investors can earn $0.825 in dividend income, which is about 12% of the stock’s current value. With a yield that high, investors can generate a lot of regular cash flow from investing in Inovalis.
For instance, investing $50,000 into this REIT or a similar-yielding stock would be enough to earn you $500 every month. And if you’ve got room inside of a Tax-Free Savings Account, then all that dividend income would also be tax-free.
Given the uncertainty surrounding COVID-19, investors may want to diversify and invest in other stocks to prevent taking on too much risk in just one stock. However, in the case of Inovalis, that stock may not be as risky as it may appear.
Shares of Inovalis are down more than 35% through the first five months of 2020. But the drop in price may have made the stock an even more attractive investment.
Why Inovalis isn’t as risky as other REITs
On May 13, Inovalis released its first-quarter results for 2020. In the press release, the company clarified that in its office portfolio, it doesn’t contain any hospitality or retail tenants, minimizing its exposure to COVID-19, at least for now. The REIT also stated that it is seeing “near-normal quarterly rent collection for the second quarter of 2020.”
There wasn’t much of an impact on the company’s results in Q1, with Inovalis reporting funds from operations per unit of $0.16 compared to $0.17 in the prior-year period.
While the situation continues to look stable for Inovalis, the company didn’t rule out that revenue may decline in future periods as a result of the pandemic.
Inovalis looks to be an underrated REIT that could not only generate significant monthly income for investors, but could also produce capital gains. At a tiny price-to-earnings multiple of less than three and the stock trading at half of its book value, it’s a dirt-cheap dividend stock to own today.
There aren’t any warning signs right now that should give investors pause, and Inovalis could form a great part of your portfolio’s long-term growth for many years to come.
Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Inovalis REIT.