Income-seeking investors should consider owning high-dividend stocks to create a passive-income stream. However, as dividend payouts are not guaranteed, it’s essential to identify companies that can generate stable cash flows across business cycles. One such high-dividend TSX stock is Slate Grocery (TSX:SGR.UN), which currently offers a yield of 9%. Let’s see why this dividend stock is my top pick for immediate income.
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Is the TSX dividend stock a good buy right now?
Valued at a market cap of $820.7 million, Slate Grocery owns and operates grocery-anchored real estate properties in the United States. The company delivered solid fourth-quarter (Q4) and 2024 results, showcasing its grocery-anchored portfolio amid broader commercial real estate challenges.
In the last 12 months, Slate Grocery reported same-property net operating income (NOI) growth of 4.3% after adjusting for completed redevelopments. A key driver of this performance has been Slate’s leasing activity, with nearly three million square feet leased throughout 2024 at double-digit rental spreads.
New leases were signed at 28% above comparable in-place rents, while non-option renewals achieved premiums of over 14% compared to expiring rates. This marks seven consecutive quarters of double-digit renewal spreads, reflecting the real estate investment trust’s (REIT’s) pricing power in a market with limited available space.
Portfolio occupancy remained stable at 94.8%, which management believes is around market norms for the sector, with potential for modest improvements in coming quarters. The REIT’s average in-place rent of US$12.65 per square foot remains below the market average of US$23.80, providing a runway for continued rent growth as leases expire and are renewed at higher rates.
The tight retail market fundamentals that underpin Slate’s performance show no signs of abating. For instance, Q4 retail construction completions totalled four million square feet, marking the lowest quarterly total in over a decade. This constrained supply environment, coupled with high construction costs and tepid lending conditions, continues to limit development and give landlords pricing power in lease negotiations.
What’s next for the TSX dividend stock?
Slate Grocery expressed confidence in pursuing opportunistic acquisitions in 2025. Moreover, CBRE (Coldwell Banker Richard Ellis) forecasts approximately US$10 billion in open-air retail transactions this year. The REIT plans to remain disciplined, targeting properties with below-market rents that can grow NOI over time.
Slate Grocery views tenant bankruptcies as opportunities rather than setbacks. This allows the company to reset rents to market levels, a strategy illustrated by the REIT’s experience with Big Lots and Party City locations, where new tenants quickly claimed the spaces.
Analysts tracking Slate Grocery stock expect its revenue to increase from US$209 million in 2024 to US$232 million in 2025 and US$240 million in 2026. Comparatively, earnings before interest, taxes, depreciation, and amortization is projected to improve from US$148.2 million in 2024 to US$152 million in 2025 and US$156 million in 2026.
Given consensus price targets, analysts remain bullish and expect the TSX stock to gain more than 12%. If we adjust for dividends, cumulative returns may be closer to 21%.
A combination of NOI growth, below-market rents, and disciplined financial management creates a solid foundation for Slate Grocery to ensure sustainable dividend increases over time.
