When the market feels like a rollercoaster, there’s something incredibly comforting about a dividend stock that just keeps paying you month after month. That’s exactly what Nexus Industrial REIT (TSX: NXR.UN) brings to the table. With a dividend yield of 9.5% as of writing, it’s the kind of income-producing machine I’m not just buying for today, but holding for decades.
Why Nexus
Nexus Industrial real estate investment trust (REIT) is a Canadian REIT that owns and manages a growing portfolio of industrial properties. Over the past few years, it’s made a major shift, moving away from retail and office properties to focus almost exclusively on industrial real estate. That move wasn’t just smart, it was strategic. Industrial real estate has seen a surge in demand thanks to the growth in e-commerce, logistics, and warehousing. More companies want space to store and move goods, and Nexus is one of the landlords ready to deliver.
What makes it even more attractive is its strong performance in 2024. According to its most recent earnings, Nexus reported net operating income (NOI) of $125.9 million, up 12.4% from the year before. The real driver of this growth? A solid increase in same-property NOI, which climbed 4.7%, and the completion of several development projects that added over 500,000 square feet of new space to its portfolio. These spaces aren’t sitting empty either, but already contributing more than $13 million to annual NOI. That’s the kind of growth that makes a dividend yield of 9.5% not just sustainable, but exciting.
Lock in now
Now onto that dividend. Nexus pays investors $0.0533 per unit every single month. On an annual basis, that works out to about $0.64 per unit. With the unit price hovering around $6.75 at writing, that puts the yield comfortably above 9%. And it’s not just high; it’s relatively safe. The company’s payout ratio currently sits at around 66.3%, meaning it’s well within its earnings capacity to keep those monthly cheques coming. For anyone looking to build retirement income, that kind of consistency is gold.
Another reason I’m locking in now? The stock is still cheap. Industrial REITs in the U.S. are often trading at premium valuations, but Nexus remains under the radar for many Canadian investors. And yet it’s executing just as well, if not better, than some of its larger peers. It has been steadily acquiring modern, high-demand warehouse and logistics space across Canada, particularly in Ontario, Alberta, and British Columbia. And the TSX stock does so while maintaining a strong balance sheet and prudent capital management.
Looking ahead
One of the most exciting areas for growth lies in the TSX stock’s development pipeline. Nexus is targeting further expansion by developing new properties in key markets. It already has over 1.1 million square feet of gross leasable area in the works. These aren’t speculative builds either. The TSX stock is careful to ensure projects are either leased or in demand before shovels hit the ground. This lowers the risk and raises the odds of strong returns once those properties come online.
The macro environment also supports Nexus’s strategy. While inflation and high interest rates have hurt other real estate segments, industrial REITs have remained relatively strong. That’s because tenants in the logistics and warehousing space are often tied to essential goods and long-term leases with built-in rent escalations. So while office towers sit half-empty and retail faces pressure, industrial real estate keeps humming along.
Bottom line
So why am I buying Nexus and planning to hold it for decades? Because it fits perfectly into a long-term income strategy. It offers a high yield, monthly payouts, exposure to a resilient and growing sector, and a clear plan for future expansion. For investors, it means compounding those monthly dividends tax-free. And that’s the kind of long-term wealth-building tool I’ll happily hold onto, through bull markets, bear markets, and everything in between.
