This 5.2% Monthly Dividend Stock Has So Much Room to Grow

This monthly dividend stock is a clear winner, and it’s one that offers more than just dividend growth, but substantial returns as well.

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. 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 October 16, 2024 5:10 am EDT

| More on: DIR.UN

Looking for a strong stock with plenty of room to grow? Look no further than Dream Industrial REIT (TSX:DIR.UN). The monthly dividend stock is currently in a strong position, showing not only resilience in its core markets but also significant room for growth. As a monthly dividend payer on the TSX, this industrial-focused real estate investment trust (REIT) has been gaining momentum, and now could be a smart time for you to jump aboard.

Income and growth financial chart — Source: Getty Images

Earnings potential

Recent financial results for Q2 2024 revealed continued progress and expansion, laying the groundwork for future returns. In Q2 2024, Dream Industrial’s leasing activity reached an impressive milestone, with over 500,000 square feet leased, including a fully leased 209,000 square foot redevelopment in Mississauga. These figures reflect the trust’s strategic focus on high-quality assets in key markets like Ontario and Alberta. The strong demand for industrial space is clear, as Dream Industrial also made significant progress in its development projects near Calgary, capturing rent increases that will drive future income.

Dream Industrial’s net rental income also increased by 5.6% year-over-year, totalling $87.7 million for Q2 2024. This underscores the strong performance of its existing portfolio. The Canadian market, particularly in Ontario and Québec, has been a key driver of this growth, with increases of 9.5% and 7.2%, respectively. The REIT also continues to enjoy healthy occupancy rates of around 95%, ensuring steady rental income and stability.

Operating growth

One of the most appealing aspects of Dream Industrial REIT is its ability to grow its net operating income (NOI) by 5% year-over-year. With industrial real estate demand continuing to rise, particularly in urban centers, the REIT has plenty of room to benefit from rent escalations and increased leasing activity. Dream’s 2024 developments, including a project in Balzac, Alberta, are poised to further enhance NOI and cash flow, offering long-term value to investors.

Plus, the dividend stock’s balance sheet is also well-positioned for growth. It holds $596 million in available liquidity and a debt-to-total-assets ratio of only 35.9%.Therefore the REIT has plenty of financial flexibility to pursue acquisitions and fund development projects. This makes it well-prepared to capitalize on future opportunities in the industrial real estate market, both in Canada and Europe.

Using funds well

The trust’s strategic decision to focus on capital recycling, or disposing of non-strategic assets while investing in higher-quality properties, has also paid off. This disciplined approach allows the dividend stock to enhance its portfolio quality while maintaining a solid cash flow profile. Investors can feel confident that management is dedicated to enhancing returns while minimizing risk.

And as of June 2024 earnings, Dream Industrial’s net asset value (NAV) per unit stood at $16.73, slightly up from $16.61 in December 2023. With the current stock price around $13.65, the REIT trades at a discount to its NAV. Thus presenting a valuable opportunity for investors seeking to lock in future growth at a lower cost. Plus, the REIT’s monthly distribution yields over 5%, making it an attractive option for income-focused investors.

Foolish takeaway

All together, Dream Industrial REIT offers a strong growth trajectory and solid financial foundation. The dividend stock’s expanding portfolio, disciplined capital strategy, and ability to capture higher rents make it a compelling option for investors seeking both growth and monthly income. With industrial real estate demand on the rise, now may be the perfect time to invest in this REIT, especially as it continues to develop and thrive.