Working tirelessly for a monthly paycheck that is insufficient makes you wish you had a few more checks coming in every month. You studied throughout high school and university to land a high-paying job. That was an investment you made. Similarly, you can invest in stocks for the next 10-12 years to ensure your money makes money for you and cuts you a check every month.
Income stocks that can cut you a dividend check each month
The stock market has something for everyone. Even if you are risk averse and all you seek is passive income, there are income stocks that give quarterly or monthly payouts. Bank, energy, utility, infrastructure, telecom, and real estate sectors are popular for their dividend stocks. While some sectors pay monthly dividends, the real estate sector sustains the monthly payouts. Many energy and utility companies switched from monthly to quarterly payouts.
Here are two such stocks related to real estate that can cut you monthly checks.
CT REIT
Canadian Tire’s real estate investment trust (REIT) CT REIT (TSX:CRT.UN) is my first choice for monthly checks. It is among the few Canadian REITs that kept growing its distributions, even when high interest rates made mortgages expensive and reduced property prices. Many commercial REITs slashed their distributions as companies reduced their leases to cut costs, which reduced occupancy in the 2023 renewal period.
But none of these factors affected CT REIT, as it has the backing of its strong parent. Canadian Tire has shifted the ownership and management of its stores across Canada to CT REIT. The REIT develops, expands, and maintains Canadian Tire’s stores in return for rent. Hence, the REIT always has 100% occupancy for its new projects. CT REIT distributes the rental income to shareholders.
In its second-quarter earnings, the REIT’s revenue and adjusted funds from operations grew 4% and 7%, respectively. Improved cash flows reduced its payout ratio to 71.4% from 74.6% in the previous year’s quarter. A ratio below 80% is well within the REIT’s target.
Despite showing fundamental strength, the REIT’s stock price trades near the oversold category due to overall weakness in the sector. Now is a good time to lock in a 5.8% yield. A $2,000 investment could buy 136 shares of CT REIT and give you a monthly check of $10. You could keep accumulating more shares and increase your paycheck. And even if you don’t add more shares, the monthly amount is likely to grow at an average annual rate of 3%.
Timbercreek Financial stock
Timbercreek Financial (TSX:TF) provides short-term mortgages to income-producing properties. Most of these properties are in urban areas where it is comparatively easier to sell the property. The rising interest rate fared well for Timbercreek, as it earned higher interest income. However, high-interest rates also increased its credit risk.
While it has a few loans in stages two and three of resolution, the majority of its portfolio performed well. Timbercreek’s income from operations increased 22% year over year in the second quarter, which reduced its dividend-payout ratio to 81.1% from 91.3% a year ago. This improvement shows that Timbercreek can sustain its monthly dividend of $0.0575 per share.
Timbercreek stock is offering a yield of 9.26%. Such a high yield brings a high risk of dividend cuts. The lender carries a risk of an increase in loan default which could affect its payout. But so far, the fundamentals state that the situation is under control.
A $2,000 investment could buy you 266 shares of Timbercreek and give you a monthly check of $15.
Investing tip
CT REIT is a lower-risk income stock, while Timbercreek is a high-risk income stock. You can invest in both stocks according to your risk appetite and start collecting monthly checks.
