At first, a 5.2% dividend yield might seem like a lot. But if you’re looking for a reliable source of monthly income, Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) on the TSX is worth considering. This real estate investment trust (REIT) offers investors steady monthly dividends and exposure to the growing industrial real estate sector, thus making it an attractive option for those focused on long-term passive income.
Dream Industrial
Dream Industrial REIT owns and operates a portfolio of high-quality industrial properties across Canada, the U.S., and Europe. Industrial real estate has seen significant demand, especially with the rise of e-commerce and the need for large distribution centres and warehouses. This demand is expected to continue, providing strong fundamentals for future growth.
Looking at DIR.UN’s recent financial performance, the trust reported quarterly revenue of $480.64 million for the most recent quarter (as of June 30, 2024). While there was a slight year-over-year decline in revenue growth (-0.50%), the dividend stock’s operating margin remained impressive at 71.21%, and its profit margin stood at 37%. These numbers reflect the strong management and efficiency of DIR.UN’s operations, even during economic fluctuations.
Current benefits
DIR.UN is trading at an affordable price-to-book ratio of 0.84, meaning you’re buying the stock at a discount compared to the value of its assets. This can be a great opportunity for income-focused investors looking to lock in a solid dividend yield of 5.19% annually. Plus, with the forward price-to-earnings ratio sitting at 15.15, this REIT is reasonably valued, suggesting it could see further appreciation in share price.
Another reason to consider the dividend stock for its monthly income is its consistent dividend payout. The REIT has a history of delivering reliable income to its shareholders, and with a forward annual dividend rate of $0.70 per share, investors can count on a stable income stream. While the payout ratio is relatively high at 115.33%, Dream Industrial’s cash flow from operations is robust, ensuring it can cover these payments comfortably.
Future reliability
In terms of future prospects, the industrial real estate sector continues to look promising. E-commerce and supply chain infrastructure demand are still strong drivers for warehouse and logistics space. With a presence in multiple markets, including Europe, DIR.UN is positioned to benefit from international expansion and diversification. This helps to mitigate risks and enhance its long-term growth potential.
While the dividend stock carries a considerable amount of debt at $2.97 billion, its debt-to-equity ratio of 63.72% is manageable within the real estate sector. Furthermore, the dividend stock maintains a healthy balance of cash, with $103.36 million in reserves — further securing its ability to weather any economic downturns while continuing to pay dividends.
Bottom line
Dream Industrial REIT offers a compelling option for investors looking for monthly dividend income from a growing sector. With strong fundamentals, a diversified portfolio, and solid management, the dividend stock is well-positioned to continue rewarding its investors in the future. Its current valuation and consistent dividend yield make it a smart pick for those seeking passive income with a potential for long-term growth.
