Dividend investing is one of the best strategies for a stock market investor. For simply owning a stock, you can get quarterly or monthly payouts from the stock added to your account balance. If you can build a sizeable portfolio of monthly dividend-paying stocks, dividend investing can be an excellent way to generate a passive income that boosts cash flow from your active income.
The TSX boasts plenty of opportunities for investors seeking monthly returns through dividend stocks. Getting as much of a return as possible on your investment might be the most attractive way to make a dividend stock play in the stock market. However, not every monthly dividend stock with a high yield is a safe bet.
When investing in dividend stocks, a high yield should not be your only criterion. You must also choose a stock with an underlying business solid enough to support those payouts and continue growing them for the long run. Typically, savvy investors are cautious about investing in high-yielding dividend stocks due to payouts being unsustainable for the underlying company.
Fortunately, there are TSX stocks offering high-yielding dividends in monthly payouts that you can buy and hold for the long run. This is why we’re focusing on SmartCentres REIT (TSX:SRU.UN).
SmartCentres REIT
SmartCentres is a real estate investment trust (REIT) that many investors consider a safe investment for monthly passive income. SmartCentres REIT is a $3.88 billion market capitalization REIT that owns and manages a portfolio of over 170 fully integrated commercial and residential properties throughout Canada.
The underlying company is also developing complete, connected, and mixed-use communities on its existing retail properties.
One of the reasons SRU stock is such a ‘smart’ investment is that its properties are anchored by giants in the retail sector like Walmart. It means the company can generate stable and reliable cash flows through virtually guaranteed rental income. The REIT’s focus on essential retail properties has been why it fares well even during economic uncertainty.
Its most recent earnings report revealed that it had a 97% occupancy rate, highlighting how strong its tenant base is. The stability also ensures the company’s ability to continue growing its cash flows in the future.
Solid dividend play
As of this writing, it trades for $21.78 per share. SRU stock pays its shareholders $1.85 per share each year in monthly distributions, reflecting an 8.49% dividend yield. SmartCentres REIT has consistently paid its shareholders their dividends for several years without fail, making it a reliable source of monthly income.
Despite economic downturns, SRU stock’s focus on essential retail properties has made it resilient. For long-term investors, that makes it an excellent investment.
Foolish takeaway
More recently, SmartCentres REIT has been diversifying into other opportunities in the real estate sector, from residential projects to self-storage facilities and more. Combined with its resilient essential retail properties portfolio, the company has a lot of projects providing long-term rental income growth and capital appreciation.
Buying and holding its shares in a Tax-Free Savings Account can help you enjoy the returns you get from SRU stock without incurring capital gains tax or income tax.
