Beat the TSX With This Cash-Gushing Dividend Stock

With earnings around the corner, you can still pick up this dividend stock with a TSX-beating dividend at 8.9% as of writing!

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The TSX today has actually been doing quite well, with shares starting to climb back towards all-time highs at the time of writing this article. Yet, as we’ve seen, this could change at any moment. Higher inflation and interest means Canadians may turn away from returns and towards holding cash.

Yet, if you want to invest in even just one stock, I would go for a dividend stock — one that offers more passive income in the future from returns but also offers enough dividends for right now. In fact, dividends that could beat out the TSX today right away.

What it would take

If you’re looking for an investment that’s going to beat out the TSX today, that means you need to look at what the TSX has been achieving in the last year. As mentioned, the TSX fell dramatically below all-time highs. However, since then it’s actually surged back to surpass 52-week highs!

While this is impressive, overall, there hasn’t been the insane growth that we saw, for instance, during the pandemic. Over the last year, for instance, the TSX has risen by 8.3%. Again, that’s strong, but what if the TSX falls once more?

In this case, investors should see what the average growth of the TSX today has been in the last decade. Since 2014, the TSX has risen by 53%. In this case, we’ve seen a compound annual growth rate (CAGR) of just 4.3% during that time period! So, to beat the TSX today, you would need to have at least 4.3% in dividends on average. But instead, we’re going to look for a dividend stock offering above 8.3%.

One to consider

If you’re an investor looking for a recovery as well as TSX-beating dividends, then I would look to a real estate investment trust (REIT). These companies have seen a drop in share prices due to high inflation and interest rates, which are putting pressure on them.

That being said, there are quite a few REITs that are starting to see a recovery. The companies took the last year to strengthen their balance sheets, and this has streamlined these REITs overall — that is, the ones that took on this method.

And one in particular that is just now starting to see a recovery is Nexus Industrial REIT (TSX:NXR.UN). The company recently reported strong first earnings and continues to operate in the safe and stable market of industrial properties. So, let’s look at why this is a strong consideration for investors on the TSX today.

Why Nexus Industrial REIT?

There are numerous reasons to consider the stock on the TSX today. During the company’s last earnings report, Nexus REIT reported strong results across the board. Its fourth quarter demonstrated net operating income that increased 17.1% year over year to $29.2 million. Net asset value (NAV) also increased to $12.87, with industrial occupancy at an insanely high 99%.

Now, first-quarter earnings are just around the corner, so investors could get in on more good news, especially based on its outlook. The first quarter will see the finalized construction of a property in British Columbia, with more properties up and running throughout the year.

Meanwhile, buying today would provide investors with a dividend yield of 8.9%! This alone would be out on the TSX today. All while picking it up at a valuable 3.08 times earnings, with a secure 27.43% payout ratio. So, if you’re looking for a company set to grow while still offering you cash-gushing dividends, Nexus REIT is the dividend stock for you.

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 recommends Nexus Industrial REIT. The Motley Fool has a disclosure policy.

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