This 9% Dividend Stock Pays Cash Every Month

Do you need some extra cash on hand? This dividend stock looks like a winner.

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 February 13, 2025 4:50 pm EST

If you’re looking for a reliable monthly dividend stock with a solid yield, Firm Capital Property Trust (TSX:FCD.UN) is worth a closer look. This mid-cap real estate investment trust (REIT) offers an attractive annual dividend yield of 9.1%, making it an appealing choice for income-seeking investors. While large-cap REITs often get the spotlight, mid-cap stocks like Firm Capital can provide strong dividend income alongside the potential for long-term capital growth. With a consistent payout history, diversified real estate portfolio, and strong financials, this dividend stock might just be a hidden gem in the Canadian market.

happy woman throws cash — Source: Getty Images

Make it monthly

One of the biggest advantages of Firm Capital Property Trust is its commitment to monthly distributions. Investors receive a dividend of $0.043 per unit each month, adding up to $0.52 per unit annually. At the current unit price of $5.70, this translates to a 9.1% dividend yield — well above the average for Canadian REITs.

Firm Capital has managed to maintain its dividend despite economic uncertainties, all thanks to its strong rental income and conservative payout ratio. Currently, its payout ratio stands at approximately 54.9%, showing that it is distributing just over half of its earnings as dividends. This leaves room for reinvestment, debt management, and potential future growth.

Into earnings

Firm Capital’s recent third-quarter (Q3) 2024 earnings report showcased steady growth and resilience. The dividend stock reported net income of $8.9 million — a significant increase from $5.6 million in the same quarter the previous year. Net operating income (NOI) also saw a 6% increase year over year, reaching $9.7 million. More importantly, adjusted funds from operations (AFFO) came in at $4.6 million, up 22% year over year.

Revenue for the trailing 12 months stands at $60.33 million, with a profit margin of 57.92% and an operating margin of 54.34% — both of which indicate strong profitability. While many REITs have struggled due to higher interest rates, Firm Capital has maintained profitability while keeping debt under control.

Offering value

Over the past year, Firm Capital’s stock price has dipped slightly by about 1.8%. However, this decline is far less severe than the broader Canadian REIT sector, which has seen a more pronounced drop of approximately 28.5%. This suggests that Firm Capital is more resilient than many of its peers, likely due to its stable cash flows and conservative debt management.

Yet a common concern for REIT investors is debt levels. Firm Capital’s total debt stands at $335.05 million, with a debt-to-equity ratio of 109.7%. While this might seem high, it is manageable within the REIT industry, where leveraging debt is a standard practice.

Currently, Firm Capital is trading at approximately 9.2 times its funds from operations (FFO), slightly below the industry’s fair price-to-FFO ratio of 10.0. Furthermore, its price-to-book ratio is just 0.69, indicating that the dividend stock is trading below the net value of its assets. This means the stock is potentially undervalued, providing a buying opportunity for long-term investors.

Foolish takeaway

For investors looking for a monthly dividend stock with a high yield, Firm Capital Property Trust (FCD.UN) is a strong contender. Its 9.1% dividend yield, steady earnings growth, diversified portfolio, and conservative payout ratio make it an attractive income investment. While the stock price has been relatively stable, its undervaluation presents a buying opportunity for long-term investors.