The 8% Dividend Stock Set to Dominate the TSX

This dividend stock hasn’t had a great few years, but that should all change come 2024. And investors should be ready for it.

| More on:

The times, they are a-changing. But at least now it may indeed be for the better. In fact, analysts have started to believe that real estate stocks may finally make a comeback in 2024 … but only certain ones.

One of those is dividend stock Automotive Properties REIT (TSX:APR.UN), which has been tapped as a possible outperformer. So, let’s look at what’s been going on and why this dividend stock could take over in 2024.

Funds rise

In a report by analysts, funds from operations in 2024 per unit growth should average 3%. This should be led by many real estate stocks in the industrial sector, which includes Automotive Properties. These companies have seen above-average year-over-year rent growth, with sector-leading single property growth in 2023.

In 2024, these companies should continue to perform strongly, especially as renewals continue to climb. However, many industrial real estate investment trusts (REITs) are trading well below fair value. That’s why this dividend stock may be the one to buy, as it remains under the radar.

Today, let’s look at why APR stock could be an excellent stock to buy and why analysts continue to be behind its growth.

Earnings come in strong

During the third quarter, the dividend stock continued to see its fundamentals grow across the board. The REIT brought in adjusted funds from operations (AFFO) of $0.23. While this was lower than the year before, it managed to continue paying out cash distributions at the same level as 2022.

The dividend stock stated it had a debt-to-gross book value ratio of just 44.5%, putting it in a financially strong position. It held a $60.8 million undrawn capacity through its revolving credit facilities as well, with $300,000 in cash on hand. It also held five unencumbered properties valued at about $70.6 million.

Finally, the company’s valuation of its properties did go down compared to the year before, which is why it remains so valuable now to pick up. Market conditions saw a fair value loss of $800,000. Now, its capitalization rate increased to 6.56% compared to 6.37% the year before.

Why the future is rising

While there were some losses, they were not huge losses. The company continues to generate growth in key metrics, which include acquisitions and its lease structure. Furthermore, there is certainly going to be major growth in one area of this market that other REITs cannot claim. That’s automobiles.

APR stock focuses on creating car dealerships across the country. This has been quite difficult over the last few years, with the pandemic restrictions leading to supply-chain issues. Therefore, even used cars were hard to find. Now, the times are changing and we’re seeing more cars on the market.

Therefore, if you’re looking for growth, APR stock could certainly give this to you in the next year. And it remains a strong stock considering that it’s been through all this volatility and remained fairly strong. Even with high interest rates and inflation, the company is still strong. The REIT remains well positioned to continue great same-property net operating income growth for 2024.

So, with a dividend yield of 7.94% as of writing, trading at 5.02 times earnings, and down 15% in the last year, APR stock could be the dividend stock that soars in 2024.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Automotive Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Man data analyze
Dividend Stocks

This 5.3% Dividend Stock Is a No-Brainer as Trump’s Tariffs Hit

This dividend stock offers investors strong income should Canada be hit by Trump's tariffs.

Read more »

Map of Canada showing connectivity
Dividend Stocks

Trump’s Tariffs: 1 Canadian Stock to Dump and 1 to Buy Immediately

As Trump threatens tariffs on Canada, these are two top stocks to watch.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA: 4 Canadian Stocks to Buy Now and Hold Forever

These top Canadian stocks could give a big boost to your hard-earned TFSA savings in the long run.

Read more »

stock research, analyze data
Dividend Stocks

Prediction: These Could Be the Best-Performing Value Stocks Through 2030

Despite short-term challenges, these top Canadian value stocks could outperform the broader market by a wide margin in the coming…

Read more »

An investor uses a tablet
Dividend Stocks

Where Will BCE Stock Be in 5 Years?

Despite facing big short-term challenges, BCE stock’s strong market position, steady dividend, and long-term vision make it worth watching.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Want Safe Dividend Income in 2025? Invest in the Following 3 Ultra-High-Yield Stocks!

The market is full of great income stocks, but this trio can provide growth potential and safe dividend income for…

Read more »

A meter measures energy use.
Dividend Stocks

Power Up Your Defences: Canadian Utility ETFs for Steady Income

It is time to power up your defence strategy to withstand market uncertainty around a looming trade war with Canadian…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

What to Know About Canadian Railway Stocks for 2025

The Canadian National Railway (TSX:CNR) isn't the only railroad stock in town.

Read more »