Here are a couple of monthly dividend payers that are under the radar. They may not be the top choices for new investors who have just started investing, but they appear to have solid growth prospects for 2024 and beyond.
RioCan REIT
RioCan REIT (TSX: REI.UN) took a dive in 2023, falling about 15% year to date to about $18 per unit. The pressure primarily came from higher interest rates and the negative outlook in retail real estate. On a closer look, the retail real estate investment trust’s (REIT) results have actually been quite resilient. For example, its funds from operations (FFO) per unit have been holding up since 2021, while the stock has come down and appears to be undervalued.
The Canadian REIT consists of 192 properties, including 10 that are under development. Its properties are primarily located in key markets across Canada, including the Greater Toronto Area, Ottawa, Montreal, Calgary, Edmonton, and Vancouver.
In the third quarter, it reported a high committed retail occupancy of 98.3%, while its overall committed occupancy was 97.5%. Additionally, it’s able to generate higher rental income from mark-to-market rents. Year to date, its blended leasing spread is 11.2% versus 9.0% a year ago. It also highlighted that its development projects continue to add steady streams of new and diversified net operating income. These are demonstrations of a quality portfolio.
Importantly, management anticipates its FFO payout ratio will be at most 65% this year. So, its current cash distribution yield of close to 6% is sustainable. Given some patience, the stock could deliver a decent upside of 29-50% over the next few years while paying a nice monthly income.
Savaria
Savaria (TSX: SIS) is an unloved small-cap stock that’s trading at similar levels as a year ago. However, it could experience strong growth next year and beyond from merger and acquisition activities and the trend of an increasing aging population.
The $1 billion market cap stock is a global leader in the accessibility industry. It designs, manufactures, distributes, and installs accessibility equipment, such as stairlifts for straight and curved stairs, vertical and inclined wheelchair lifts, and elevators for home and commercial use.
In addition, Savaria manufactures and markets a selection of pressure management products for the medical market, medical beds for the long-term care market, and medical equipment and solutions for the safe handling of patients, including ceiling lifts and slings. Furthermore, it converts and adapts vehicles for personal and commercial uses.
Interestingly, Savaria is a Canadian Dividend Aristocrat with a five-year dividend-growth rate of 12.2%. The analyst consensus 12-month price target on Savaria stock is $19.50, which represents a decent discount of 24% or near-term upside potential of close to 32%, at $14.78 per share at writing. At this quotation, it also offers a dividend yield of 3.5%, paid out as monthly income.
Notably, its payout ratio is expected to be a bit high at about 83% of adjusted earnings this year. Should the company be able to grow over the next few years, it would be able to quickly reduce the payout ratio to levels that are more comfortable.
