Passive income is needed by us all these days. Yet, many Canadians may think passive income might actually be real work. A part-time job, selling items online, even your passion project is effort. Which is why finding a strong dividend stock is instead what you should search for.
Finding a dividend stock with stellar passive income that will continue to be available is the perfect way to survive a future recession. And right now, this is the one I would invest in.
Allied Properties REIT
First, let’s get into the obvious reasons why you would be investing in Allied Properties Real Estate Investment Trust (TSX: AP.UN) in the first place. Allied stock currently offers a dividend yield at 7.52% as of writing. Shares are also down a whopping 49% in the last year alone, and 8% year to date.
So, it’s clear the dividend stock offers passive income at a valuable price. But, of course, the problem is whether or not this dividend can be sustained. That’s why we now need to look at earnings reports. This can tell us if the company is headed towards trouble during a recession, or if you will still receive passive income.
What earnings tell us
Allied stock announced its fourth-quarter and full-year earnings back in January. And, in fact, the company stated that 2022 was strong. They didn’t see any drop-off in performance, as did other real estate investment trusts (REIT), but instead saw growth.
The dividend stock announced that adjusted funds from operations (AFFO) were up 4% from the year before. It was also their 11th consecutive increase in their dividend. The company expects low-to-mid-single-digit growth in their net operating income (NOI) as well, along with AFFO.
Both internal and external estimates fell in-line with company results, with a drop only in the net asset value (NAV). This, of course, came from outside conditions, more specifically, the falling property market across Canada.
Meanwhile, its total assets increased 14.7% in value year over year, with rental revenue climbing 9.9% as well. However, net income was down across the board as shares of the company fell. The other weak point was a 90% occupancy rate, which was a minor fall of 0.3% compared to the year before.
What this all means
The points here I want to focus on are that the company is mainly seeing NAV fall as the property market shifts. Further, while its occupancy fell, it was not a significant amount. And with dividends increasing once more, and practically every other area seeing an increase in performance, this dividend stock still looks like a solid investment.
In fact, Allied stock should recover quite nicely in the year to come when property prices return to normalcy. So you could get a significant discount with shares trading down. In fact, let’s look at how much you could get now, versus back at 52-week highs.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
| AP.UN -now | $24 | 208 | $1.80 | $374.40 | monthly | $5,000 |
| AP.UN – highs | $47.24 | 106 | $1.80 | $190.80 | monthly | $5,000 |
As you can see, investing in this strong dividend stock now certainly pays. You’ll receive just under double the amount of passive income each and every year. Starting right now.
