This 7% Dividend Stock Pays Cash Every Month

This TSX dividend stock could help you make $100/month in passive income.

Sneha Nahata

Sneha is a M.Sc. in finance and has been a Motley Fool contributor since mid-2020. Sneha specializes in writing about bank, energy, consumer and TMT (technology, media, and telecom) stocks. She focuses on identifying winning long-term stock picks.

Published May 22, 2023 4:30 pm EDT

| More on: SRU.UN

The S&P/TSX Composite Index has remained resilient so far in 2023 due to the easing of inflation and supply chain concerns. However, economic uncertainty continues to pose challenges for equity investors and keeps Canadian stocks volatile.

While the stock market could remain volatile in the short term, investors can still earn regular income through dividend-paying stocks. While the TSX has several fundamentally strong dividend-paying companies, I’ll restrict myself to the one with a monthly payout. A monthly paying dividend stock boosts your overall income and allows you to reinvest the same for buying additional shares, thus enhancing your returns in the long term.

Against this backdrop, let’s zoom in on a top Canadian dividend stock that offers monthly payouts.

The 7% dividend stock

Before I delve deeper into the stock, investors need to know that dividend payments depend on a company’s performance and are never guaranteed. A fundamentally strong company could cut or pause dividend payouts depending on the circumstances. It is thus important for investors to assess a stock well before investing and diversify their income portfolio to reduce risk.

Now speaking of top stocks that pay monthly dividends, investors could consider putting money in REITs or real estate investment trusts. REITs offer higher payouts and long-term capital appreciation. Within the REITs space, SmartCentres Real Estate Investment Trust (TSX:SRU.UN) could be a solid addition to earn monthly cash.

With an extensive network of income-producing, value-oriented retail and first-class office space, SmartCentres REIT intends to pay a reliable and growing dividend to its shareholders. Its monthly dividend of $0.154 translates into an attractive and high yield of 7.21% (based on its closing price of $25.66 on May 19).

Why is SmartCentres REIT an attractive income stock?

SmartCentres is among the largest fully integrated REITs in Canada. It owns a best-in-class portfolio of 188 strategically located properties in Canada with about $11.7 billion in assets and 34.8 million square feet of income-producing space.

Its industry-leading occupancy level of 98% and a solid tenant base positions it well to deliver strong cash flows and enhance its shareholders’ returns through consistent dividend payments. Notably, 60% of its rents are collected from creditworthy and essential service providers, including top retailers like Walmart and Metro. This adds stability to its cash flows and covers regular dividend payments. Moreover, most of SmartCentres’ debt is fixed rate, which makes it less susceptible to rising interest rates.

Thanks to its top-quality assets and tenant base, and a high occupancy rate, SmartCentres has delivered an average annual return of approximately 13% since its IPO, making it an attractive long-term investment.

Bottom line

Overall, SmartCentres REIT is a solid investment to earn regular monthly cash. If you buy about 651 shares of SmartCentres REIT right now, you can earn $100 in passive income every month. To buy 651 shares of SmartCentres REIT near the current market price, one would have to invest about $16.7K.