Dream Industrial REIT (TSX:DIR.UN) is making waves as an attractive option for anyone looking to build monthly passive income through dividends. As a Canadian real estate investment trust (REIT) specializing in industrial properties, Dream Industrial offers exposure to a sector that’s been robustly growing. With strong earnings, steady historical performance, and a solid dividend yield, it’s easy to see why this dividend stock could be a key addition to a passive-income portfolio.
Into earnings
Recent earnings paint a favourable picture for Dream Industrial. For the third quarter (Q3) of 2024, the real estate investment trust (REIT) posted a solid 4.1% increase in diluted funds from operations (FFO) per unit, rising from $0.25 in Q3 2023 to $0.26 this year. Net rental income also rose to $90.5 million, marking a 7.1% increase from the same quarter last year. This income growth underscores the REIT’s efficiency in managing its properties and the strong demand for industrial spaces across Canada and Europe, where it operates.
One of the appealing aspects of Dream Industrial’s performance is its geographic diversity. Growth in net rental income wasn’t limited to one region either Ontario and Québec saw 15.6% and 14.1% year-over-year increases, respectively. Even in Western Canada and Europe, net rental income grew, albeit at a slower pace. This diversification helps cushion against economic swings in specific areas, providing a stable income stream for investors.
Despite a small dip in quarterly net income due to non-cash fair value adjustments, the dividend stock has shown resilience. The fair value adjustments, while affecting reported net income, don’t reflect cash flow or operational health. With an in-place and committed occupancy rate of 95.5%, Dream Industrial’s high occupancy indicates a well-managed portfolio that continues to draw in tenants and maintain steady rental income.
Solid base
Dream Industrial’s balance sheet also stands out. The dividend stock’s total assets grew to $8.1 billion as of September 30, 2024, driven by new investments in development projects and joint ventures. Its total equity also increased to $4.7 billion, reflecting prudent capital management. This growing asset base is a positive indicator of Dream Industrial’s ability to generate future rental income. This is key for sustaining dividends.
Over the years, Dream Industrial has cultivated a reputation for consistency. It currently offers an annual dividend yield of 5.24%, making it an appealing option for dividend-focused investors. This dividend is paid monthly, aligning well with passive-income goals. Though the payout ratio hovers over 100%, which might appear high, the dividend stock’s operating cash flow and earnings stability support its ability to sustain dividends.
Future favourite
Looking forward, the future outlook for Dream Industrial appears bright. The demand for industrial real estate is expected to remain strong, driven by trends such as e-commerce expansion and increased need for storage and distribution facilities. The dividend stock is well-positioned to benefit from these trends, with ongoing development projects that aim to expand its footprint and rental income potential.
Investors considering Dream Industrial for monthly passive income can also appreciate its recent stock performance. Although its price has fluctuated, its 52-week range remains comfortably within the bounds of a stable REIT investment. The dividend stock’s beta of 1.25 indicates slightly higher volatility than the market average. But this could provide opportunities for investors who want to capitalize on market dips.
Bottom line
So, how much could a $20,000 create in monthly passive income? Let’s take a look based on the company’s offerings at the time of writing.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| DIR.UN | $13.15 | 1,521 | $0.70 | $1,064.70 | monthly | $20,000 |
Investors could then get $1,064.70 annually, coming out at $88.73 every month! Therefore, Dream Industrial REIT offers a compelling combination of solid earnings, reliable dividend payments, and promising future growth. Its steady performance in recent quarters and diversified asset base make it a strong candidate for investors seeking stable monthly passive income. With its focus on industrial real estate and a robust dividend yield, Dream Industrial REIT shines as an appealing option for those looking to enhance their passive-income portfolio in the real estate sector.
