Set and Forget: 1 Dividend Stock That Could Create $8,249.60 in Tax-Free Income in 10 Years

This dividend stock is a prime option for investors looking for long-term dividend income. And the numbers prove it.

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Are you on the hunt for a rock-solid dividend stock to stock up your Tax-Free Savings Account (TFSA)? Look no further than Slate Grocery REIT (TSX:SGR.UN), the superstar of grocery-anchored real estate. This real estate investment trust (REIT) isn’t just another pretty face. It’s got the numbers to back up its charm.

Today, we’re going to look at some of those numbers and how much its current dividend yield at a whopping 10.68% could bring in for your TFSA in the next decade.

Stable and strong

SGR stock stands out as a strong dividend stock for a long-term TFSA investment due to its robust performance and strategic positioning within the grocery-anchored real estate sector. In the first quarter of 2024, Slate Grocery REIT pulled off an impressive feat by leasing nearly 800,000 square feet at mouth-watering double-digit spreads. Imagine securing new deals 30.9% above the average in-place rent—now that’s what I call a win! With a portfolio occupancy rate of 94.4% and an average rent well below market rates, this REIT is all set for even more growth.

Financially, it’s like a well-tuned orchestra, with net operating income (NOI) hitting $40.6 million, up by $1.0 million from last year. Plus, 94.2% of its debt is fixed at a sweet 4.4% interest rate, providing stability and security in these volatile times. To top it off, the REIT’s units are trading at a delightful discount to net asset value (NAV), making it an irresistible opportunity for savvy investors.

Plus, Slate Grocery REIT’s balance sheet is the epitome of financial finesse! With 94.2% of its debt locked in at a low 4.4% interest rate, this REIT is like a financial fortress—stable and secure. This savvy approach means they’re well-protected in today’s interest rate roller coaster. And here’s the cherry on top: the REIT’s units are trading at a mouth-watering discount to their NAV. As of March 31, 2024, the unit price boasts an implied capitalization rate of 8.0%, a whopping 39.8% discount to NAV. Talk about an attractive investment opportunity!

That juicy dividend

Slate Grocery REIT is a dividend dynamo! Picture this: a REIT that not only anchors your portfolio with grocery-anchored real estate but also dishes out delicious dividends. As of their latest reports, Slate Grocery REIT sports a yield that’s as mouth-watering as a fresh-out-of-the-oven pie. Their dividends are backed by strong financials, with a whopping 94.2% of their debt fixed at a sweet 4.4% interest rate, ensuring stability and consistency in payouts.

And how it offers that incredible 10.68% dividend yield with a payout ratio at 138%, which is slowly coming down. Further, it’s dividend is far above the five-year average of 7.76%. So, it’s one great opportunity!

Bottom line

With a compound annual growth rate (CAGR) of 5.04% in shares and 0.28% in dividends, this stock can provide strong growth in the next decade. In fact, here’s how much you could make from a $5,000 investment.

COMPANYPRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
SGR.UN – now$11455$1.19$541.45monthly$5,000
SGR.UN – 5%$11.55455$1.19$541.45monthly$5,255.25
SGR.UN – 5%$12.13455$1.20$546monthly$5.519.15
SGR.UN – 5%$12.73455$1.20$546monthly$5,792.15
SGR.UN – 5%$13.37455$1.21$550.55monthly$6,083.35
SGR.UN – 5%$14.03455$1.21$550.55monthly$6,383.65
SGR.UN – 5%$14.74455$1.21$550.55monthly$6,706.70
SGR.UN – 5%$15.48455$1.21$550.55monthly$7,043.40
SGR.UN – 5%$16.25455$1.22$555.10monthly$7,393.75
SGR.UN – 5%$17.06455$1.22$555.10monthly$7,762.30

You could create $2,762.30 in returns and a total of $5,487.30 in dividend income! In total, you could make passive income of $8,249.60 in a decade. And that’s just the average.

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 Slate Grocery REIT. The Motley Fool has a disclosure policy.

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