Investing in dividend stocks when they’re down is a strategy that resonates with savvy, patient investors. The rationale is simple: buying when prices dip allows you to acquire more shares for the same amount of money. This not only sets you up for potential capital appreciation when the stock price recovers. It also enhances your dividend yield. Essentially, downturns offer a chance to lock in higher returns on your initial investment. By focusing on these companies during downturns, you’re buying into resilience and future potential, not just a temporary price movement.
Consider CT REIT
One such dividend stock that exemplifies this opportunity is CT Real Estate Investment Trust (TSX:CRT.UN), down 9% since 52-week highs. CT REIT offers an enticing forward annual dividend yield of approximately 6.15% at writing. This makes it an appealing choice for income-focused investors, especially in a volatile market. Beyond the attractive yield, CT REIT is backed by a strong track record of consistent performance, underpinned by a robust portfolio and reliable tenants, which include Canadian Tire as its anchor.
CT REIT’s financial performance in recent quarters has been solid. In the third quarter of 2024, the trust reported property revenue of $144.6 million, marking a 5.2% increase year-over-year. Its net operating income (NOI) also grew by 3.4% to $113.6 million. This steady growth reflects CT REIT’s ability to manage its properties effectively and capitalize on opportunities in the real estate market. For investors, these numbers are a testament to the trust’s operational excellence and its ability to generate consistent income, even in challenging market conditions.
One of the hallmarks of CT REIT’s success is its high occupancy rate. As of writing, the trust reported a committed occupancy of 99.4%. This is not just a number. It’s a signal of the quality of CT REIT’s portfolio and the strength of its relationships with tenants. A nearly full occupancy rate ensures steady cash flows. These are critical for maintaining and increasing dividend payouts. For investors, this stability is particularly reassuring, especially in a sector like real estate, where occupancy rates can fluctuate widely.
What to watch
CT REIT is not resting on its laurels. The trust has been actively investing in its portfolio to drive future growth. In the third quarter of 2024, it announced three new investments worth approximately $85 million. These projects are expected to add about 283,000 square feet of gross leasable area, strengthening CT REIT’s footprint and income potential. Strategic expansions like these demonstrate the trust’s forward-thinking approach and its commitment to creating long-term value for unitholders.
Dividend growth is another standout feature of CT REIT. In May 2024, the trust announced a 3% increase in its monthly distributions, marking the tenth consecutive annual increase. This consistent growth in dividends is a clear signal of management’s confidence in the trust’s financial health. For investors, it’s an assurance that their income will not only remain stable but will likely grow over time. Providing a hedge against inflation and enhancing long-term returns.
CT REIT’s financial discipline is worth highlighting. With a payout ratio of 76.17%, the trust strikes a balance between rewarding unitholders and reinvesting in its business. Its ability to maintain such a disciplined approach while consistently increasing distributions underscores the strength of its operations and financial management. Furthermore, its debt-to-equity ratio of 74.8% is manageable, reflecting prudent leverage practices in an asset-heavy industry.
Bottom line
Buying dividend stocks like CT REIT during price dips offers a unique combination of benefits. You lock in a higher yield, position yourself for capital appreciation, and invest in a company with a proven track record of performance and growth. CT REIT’s consistent financial results, strategic investments, and commitment to returning value to unitholders make it an excellent choice for dividend-focused investors. For those willing to look beyond short-term market noise, CT REIT provides a reliable, income-generating opportunity with strong potential for long-term appreciation.
