Finding great dividend stocks can seem relatively easy — that is, if you’re looking at the dividend yield alone. Certainly, you can find a number of lists online that detail the highest-yielding dividend stocks on the TSX today. But that doesn’t mean those dividends will last.
In fact, it’s arguable that those with higher dividend yields can actually be set up for failure. They could have that high yield because the company’s share price is dropping. Furthermore, the payout ratio could be high, meaning a dividend cut could be on the way.
Today, we’re going to look at three dividend stocks set up for success. Each has a solid payout ratio, is in a strong sector, and has a cheap share price to boot.
Dream Industrial REIT
Dream Industrial REIT (TSX: DIR.UN) is a perfect dividend stock to start off with. The real estate investment trust (REIT) offers stable and predictable income streams. It generates consistent rental income from its properties, which can provide investors with reliable dividends.
Furthermore, the increasing demand for logistics and distribution centres due to the growth of e-commerce and the need for efficient supply chains can positively impact industrial real estate investments. The dividend stock’s properties may benefit from this trend, leading to potential appreciation in property values and rental income.
So, with shares at just $13 as of writing, and a 5.4% dividend yield, the company looks like a strong investment to consider — especially as it payout ratio improves, and shares climb higher, already up 14% from 52-week lows.
Choice Properties
Another strong REIT to consider is Choice Properties REIT (TSX: CHP.UN). The dividend stock owns and operates a diverse portfolio of retail and commercial properties across Canada. Its portfolio includes grocery stores, shopping centres, and other retail properties anchored by well-known tenants like Loblaw. These types of properties often provide stable cash flows as they cater to essential needs and typically have long-term lease agreements.
Despite economic fluctuations, grocery-anchored retail properties tend to be more resilient compared to other types of retail real estate. People need to buy groceries regardless of economic conditions, which can help sustain occupancy rates and rental income for Choice Properties REIT.
So, with shares at just $13 and a 5.83% dividend yield, it also looks like a strong investment choice. It also has a stable payout ratio at 81%, with shares up 11% from 52-week lows.
NorthWest REIT
After a year of balancing the books, NorthWest Healthcare Properties REIT (TSX:NWH.UN) has been making a comeback. NWH.UN specializes in owning and managing healthcare real estate properties, including medical office buildings, hospitals, and clinics. Healthcare real estate tends to have stable and resilient demand, as healthcare services are essential regardless of economic conditions. This can translate into consistent rental income for the REIT.
Furthermore, NWH.UN typically enters long-term lease agreements with reputable healthcare providers, government agencies, and healthcare-related organizations. These leases often have built-in rent escalations and lease renewal options, providing visibility into future cash flows and reducing tenant turnover risk.
So, now that the dividend stock has sold non-core assets and renegotiated loans at lower rates, it’s a strong time to get in on the stock — especially with a 6.75% dividend yield and shares up 37% from 52-week lows.
