The economy turned out better than many expected in 2023, significantly lifting beaten-down growth stocks. Further, easing inflation and an anticipated stabilization in interest rates supported the recovery in stocks. However, the economic uncertainty continues to keep the market volatile. Nonetheless, investors can still make steady income each month via fundamentally strong dividend-paying stocks, regardless of where the market moves.
While the TSX has several top-quality, dividend-paying companies that have been consistently paying and growing their dividends, I’ll focus on the one that offers a monthly payout and compelling yield near the current levels. Notably, a dividend stock offering monthly payouts enhances your overall income. Further, a reinvestment t of the dividends will help investors buy additional shares, enhancing overall returns in the long term.
Against this backdrop, let’s look at a high-quality Canadian dividend stock that pays cash each month.
The top monthly-paying stock
Before discussing the monthly-paying stock, it is important to highlight that dividend payments are never guaranteed. Thus, investors looking for reliable monthly income must diversify their portfolios and invest in multiple stocks to lower future disappointments.
Returning to the top monthly-paying stock, one could consider investing in SmartCentres Real Estate Investment Trust (TSX:SRU.UN). It operates as a REIT (real estate investment trust) and is famous for its lucrative payouts. REITs generally offer higher payouts, making them an ideal investment for generating a steady income.
SmartCentres is Canada’s leading fully integrated REIT. The firm owns $11.7 billion worth of assets and operates an attractive portfolio of 188 strategically located properties. Overall, it owns 34.8 million square feet of income-producing retail and first-class office space, which supports its monthly payouts.
SmartCentres REIT pays a reliable and growing dividend to its shareholders. Meanwhile, its payout ratio of over 90% remains stable. The company pays a monthly dividend of $0.154 per share, translating into a compelling yield of 7.36% (based on its closing price of $25.14 on July 21).
What makes SmartCentres a reliable monthly income stock?
SmartCentres’s differentiating factors are its high-quality rental space that benefits from stable and large tenants and its industry-leading occupancy rate. For instance, most of its tenants provide essential services and own large businesses. Some of its top tenants include Walmart, Metro, and Dollarama. Thanks to its high-quality tenants, SmartCentres enjoys a high occupancy rate of 98%.
SmartCentres’s balance sheet remains strong, with most of its debt being fixed rate. The high proportion of fixed-rate debt safeguards SmartCentres against a higher interest-rate environment.
Overall, SmartCentres, with its solid tenant base and high occupancy rate, is well positioned to grow its assets and dividend payments in the coming years.
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The table above shows that if you buy about 650 shares of SmartCentres REIT right now, you can earn $100 in passive income every month. To buy 650 shares of SmartCentres REIT near the current market price, one would have to invest about $16.35K.