Investing in high-yield dividend stocks can help investors create a low-cost passive income stream in 2025. However, as dividends are not guaranteed and can be revoked at any time, it’s essential to look beyond a company’s attractive yield and analyze the sustainability of these payouts.
One TSX stock that pays you a tasty dividend of over 9% in April 2025 is Firm Capital Property Trust (TSX:FCD.UN).
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Is the TSX dividend stock a good buy right now?
Firm Capital Property Trust reported solid fourth-quarter (Q4) 2024 results, showing resilience in a challenging economic environment characterized by high interest rates and emerging tariff concerns.
The diversified Canadian real estate investment trust’s portfolio value reached $634 million at year-end. Its net operating income (NOI) for Q4 reached $9.8 million, up from $9.5 million in the same period last year.
“While recent economic indicators are pointing to the end of the inflationary environment we are facing, a new threat in tariffs from the United States is creating significant uncertainty in the Canadian economy,” noted the company in its outlook statement. Despite these headwinds, Firm Capital maintained its quarterly distribution of $0.130 per unit, offering investors an attractive 9.11% distribution yield.
The real estate investment trust (REIT) has increased distributions nine times over the past eleven years, demonstrating a commitment to delivering shareholder value. The trust’s tax efficiency remains high, with 85% of 2024 distributions qualifying as the return of capital.
“The trust has boosted its liquidity in 2024 with higher loan proceeds from mortgage refinancings,” Firm Capital stated, highlighting its improved financial position. Moreover, Firm Capital reported a conservative leverage ratio of 51%, slightly below its target range of 55-65%.
The diversified portfolio continues to show strong performance across its asset classes. Particularly notable were the significant rent increases in multi-residential properties (+14%), industrial assets (+12%), and manufactured home communities (+10%), while retail properties showed more modest growth (+0.2%).
Geographically, the trust maintains a balanced presence across Canada, with Quebec (38%) and Ontario (36%) accounting for the majority of its holdings, followed by Alberta (15%) and Nova Scotia (8%). By asset type, grocery-anchored retail properties account for 49% of NOI, with industrial properties at 28% and multi-residential at 13%.
What’s next for the TSX dividend payer?
In 2025, Firm Capital expects to benefit from lower interest rates as the Bank of Canada continues its easing cycle, having reduced the overnight rate to 2.75%. It also anticipates further rate cuts this year, which should positively impact borrowing costs across the portfolio.
“Net asset value should continue to rise driven by NOI growth,” Firm Capital projected, noting that its AFFO (adjusted funds from operations) payout ratio improved slightly to 100% in Q4 from 101% in the prior year.
Analysts expect Firm Capital to increase its AFFO from $0.51 per share in 2024 to $0.52 per share in 2026. So, its payout ratio will likely hover around 100% unless the company can lower borrowing costs and related expenses in the next two years.
With a disciplined investment approach focused on capital preservation and an annualized total return of 11.51% since inception, Firm Capital Property Trust continues to position itself as a resilient player in Canada’s real estate market despite economic uncertainties.
