Which High-Yield Dividend Stock Is Better: True North or BTB REIT?

These two high-dividend yielders are perfect options for investors. But which is the better buy these days?

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published September 25, 2024 4:40 pm EDT

High-yield dividend stocks offer higher-than-average dividends. These can provide a steady stream of income, especially for those looking to supplement their earnings or enjoy some extra cash flow. Not only do they provide regular payouts. These can also be a great hedge against market volatility. When stock prices dip, those juicy dividends can help soften the blow. Plus, companies that pay high dividends often have strong financial health and a commitment to returning value to shareholders, thus making them an attractive option for income-focused investors. So, embracing high-yield dividend stocks can be a tasty way to boost your investment strategy! With that in mind, here are some to consider.

TNT REIT

True North Commercial REIT (TSX: TNT.UN) is shaping up to be an intriguing option for investors looking for high-yield dividend stocks. In its recent second-quarter (Q2) 2024 results, the real estate investment trust (REIT) reported solid leasing activity, completing over 152,600 square feet of leases with a respectable average lease term of 4.3 years. Notably, the REIT achieved a normalized same-property net operating income (NOI) growth of 2.4%. Thus showcasing its ability to maintain and enhance profitability even amid a competitive landscape. Additionally, True North’s focus on a strategic normal course issuer bid (NCIB) program is noteworthy. It allows the REIT to repurchase units at a significant discount to its net asset value, potentially enhancing shareholder value.

Furthermore, True North’s financial health reflects a commitment to long-term growth. The REIT’s portfolio occupancy rate stands at around 90%, which is quite competitive within its operational markets. Despite a slight decrease in revenue and net operating income (NOI) compared to the previous year, the underlying growth in same-property NOI indicates a strong operational foundation. As the REIT continues to optimize its asset base, streamline operations, and potentially reinstate its distributions, the prospects for a dividend increase this year look promising, especially given the current inferred distribution yield of about 18.7%. For income-focused investors, True North Commercial REIT could be a compelling option worth considering.

BTB REIT

BTB REIT (TSX: BTB.UN) presents an appealing option for high-yield dividend seekers. The REIT recently reported strong Q2 2024 results, highlighting a record-high occupancy rate of 94.6%. This reflects the effectiveness of its leasing strategies. The uptick in occupancy, combined with a 0.5% increase in rental revenue for the first half of the year, signals that BTB is successfully navigating the competitive real estate market. Moreover, the average renewal rate for leases climbed to 5.7%, thus indicating that existing tenants are willing to pay more to stay.

Another noteworthy aspect is BTB’s proactive management of its debt portfolio. The REIT has managed to reduce its total debt ratio to 58.1%, down from 58.9% at the end of 2023. This prudent approach, coupled with an improving mortgage debt ratio, showcases BTB’s commitment to financial stability. While the REIT experienced a decline in net income, primarily due to increased financial expenses, it remains dedicated to strategic initiatives. These include targeted asset dispositions and acquisitions. This positions BTB to potentially enhance its property portfolio and maintain its competitive edge in the market.

With a forward annual dividend yield of approximately 8.47%, BTB offers an attractive return for income-focused investors. Its payout ratio stands at a healthy 85.71%, and the company’s solid occupancy rates and rental revenue growth provide a strong foundation for sustaining its dividend payments. As BTB continues to execute its growth strategy and manage its financial health effectively, it could be a compelling high-yield dividend stock. This one is worth considering for those looking to enhance their investment portfolio.

Bottom line

When comparing TNT and BTB, it seems like TNT might have the edge right now. TNT boasts a solid occupancy rate of around 90% and has shown consistent leasing activity, which indicates a strong tenant demand. Additionally, TNT’s focus on repurchasing trust units at a discount to their net asset value could enhance shareholder value. However, BTB has a slightly higher occupancy rate of 94.6% and offers a higher dividend yield of about 8.47%, but it faces challenges with rising debt ratios and net income declines. So, if you’re looking for stability and growth potential, TNT may be the better bet, while BTB could appeal more to those seeking high yields.