North America’s stock markets continue to spike and dip because of trade confusion coming from across the border. The Toronto Stock Exchange shed -1.5% to start the second week of March but remains up 12% from a year ago. However, if you have an investment appetite, notwithstanding the current tension, invest in AI.
AI is not artificial intelligence-related, but the ticker for Atrium Mortgage Investment Corporation (TSX:AI), one of Canada’s largest mortgage investment corporations. It provides creative financing solutions to the commercial real estate and development communities in Ontario and Western Canada.
The growth outlook for this $505.7 million non-bank lender is generally favourable. Read on to know why this financial services stock deserves serious consideration and is a lucrative investment option in 2025.
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Low-risk portfolio
Atrium MIC was formed 24 years ago and has maintained a low-risk portfolio since going public in 2012. Today, it boasts a diversified, high-quality residential, multi-residential, and commercial mortgage portfolio. Investors have been rewarded with strong, consistent returns, not to mention recurring monthly dividend income.
To ensure a consistent earnings profile and sustain strong operating results, Atrium MIC focuses on first mortgages in major metropolitan markets. As of year-end 2024, 96.7% of the mortgage portfolio is first mortgages, while the loan-to-value is 61.9%. The mortgage loan amount ranges from $300,000 to $30 million, typically with one to two-year terms and interest-only mortgage payments.
Very successful year
Management describes Atrium MIC’s performance in 2024 as ‘very successful.’ The highlight was fewer problem loans because of the more conservative underwriting than other non-bank lenders. More importantly, Rob Goodall, CEO of Atrium, said, “We are well positioned in 2025 to navigate an unpredictable year caused by weak real estate market conditions and tariffs imposed by the United States on Canadian goods.
In 2024, revenue and net income declined 1.3% and 7.1% to $97.3 million and $47.8 million, respectively, versus 2023. Still, Goodall added, “I am very proud that the last three years have been the best three years since Atrium went public in 2012.” The average net income is $48.6 million.
Atrium MIC fills a lending gap as larger financial institutions shun their loan borrowers even if they present an acceptable underwriting risk. However, the board of directors can change investment policies and concentrate only on residential, commercial, or commercial mortgage-backed securities.
Monthly dividends and more
Atrium MIC appeals to income-focused investors for its high yield and monthly payouts. Besides the regular dividend payments, the board may approve and declare special dividends depending on the MIC’s financial performance. Supported by strong, consistent results, the financial stock has paid special dividends yearly since 2020.
Assuming you invest today, the current share price is $10.70 and the dividend offer is a mouth-watering 8.8%. A $10,500 position transforms into $77 in monthly passive income. Earnings are tax-free in a Tax-Free Savings Account (TFSA).
Goodall looks forward to 2025 because he sees less competition from non-bank lenders. In addition to the ample funding capacity to support future growth, the defensive lending strategy is also a winner.
