Diversifying your portfolio is something that all investors should be doing. New investors in particular may find that ask daunting, but fortunately, the market gives us plenty of options to choose from. One such option right now is a stellar dividend that is just too cheap to ignore.
That stock to consider right now is Exchange Income Corporation (TSX: EIF).
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Meet Exchange
For those unfamiliar with the stock, Exchange is an acquisition-focused company. Exchange owns over a dozen subsidiary companies that broadly fall into aviation and manufacturing segments.
Those companies generate a recurring revenue stream that leaves room for Exchange to invest in growth and pay out a handsome dividend.
One of the key considerations for prospective investors to note about Exchange is the types of businesses that fall into those two segments.
That’s because all of those subsidiaries have two key advantages in common. They are all cash-generating businesses, and they serve or provide niche services to areas of the market where there is extremely limited, if any, competition.
By way of example, in the aviation segment, Exchange’s subsidiaries include medevac services as well as providing passenger and cargo services to Canada’s remote northern regions.
Turning to the manufacturing segment, Exchange boasts subsidiaries that manufacture unique window-wall systems for high-rise towers, cell tower fabrication services and manufacturing services for the defence industry.
Despite that broad defensive appeal, Exchange is trading down this year. As of the time of writing, the stock trades down nearly 11% year to date. This fact alone makes the stock an intriguing, too-cheap-to-ignore pick for any investor.
And that’s without mentioning the best part of all: that monthly dividend.
Let’s talk about that monthly dividend
Apart from the stock being too cheap to ignore, another key reason for investors to consider Exchange right now is the company’s monthly dividend.
As of the time of writing, Exchange offers a juicy 5.00% yield that is paid out monthly. This means that investors who can drop $30,000 into Exchange (as part of a larger, well-diversified portfolio) can expect to generate a monthly income of just under $125.
Even better, investors who aren’t ready to draw on that income just yet can choose to reinvest those dividends. This will let any eventual income to continue growing over the longer term.
Reinvesting those dividends also helps investors benefit from another key point that Exchange offers: dividend increases.
Exchange has provided investors with a near-annual increase to that dividend going back two decades. In fact, the company has provided 17 increases over the past 19 years, making it a superb option for any income-seeking investor.
Throw in the fact that Exchange trades at a discounted level right now, and you have a great long-term option that is just too cheap to ignore.
Is Exchange too cheap to ignore?
Exchange ticks the boxes for investors who are seeking growth, defensive appeal and a growing source of income. The company’s well-diversified business is also a refreshing change for investors looking for a buy-and-forget option.
In my opinion, Exchange would do well as a small part of any larger, well-diversified portfolio.
Buy it, hold it, and watch your future income grow.
