Diversifying your portfolio is one of the most repeated words of advice from pundits and armchair executives alike. Contrary to the stereotype, it is possible to achieve diversification in your portfolio while investing in a stellar TSX dividend stock that pays out monthly.
Yes, a diversified TSX dividend stock exists, and it belongs in your portfolio. That company is Exchange Income Corporation (TSX:EIF), and here’s what investors need to know.
Meet Exchange Income Corporation
Exchange is an acquisition-focused stock that operates over a dozen subsidiaries broadly classified into aviation and manufacturing segments.
The subsidiaries offer stable business models that generate free cash and serve unique niches in the market. In fact, many of those subsidiaries operate in segments where there is limited, if any, competition.
By way of example, in the aviation segment, Exchange’s subsidiaries include one of Canada’s largest flight schools as well as passenger and cargo air service to Canada’s remote north.
Turning to the manufacturing segment, examples of Exchange’s subsidiaries include wireless infrastructure solutions and the manufacturing of precision parts and components for the defence segment.
Apart from the niche factor these businesses boast, there’s also a unique vertical integration synergy afoot.
Specifically, pilots trained in Exchange’s flight school (Moncton Flight College) receive a guaranteed five-year offer within one of Exchange’s airlines.
A similar arrangement exists on the manufacturing side, where machining, manufacturing and processing subsidiaries work together to streamline projects.
How is Exchange doing?
The result of that efficient cross-subsidiary operations is healthy revenue generation that leaves room for growth and a tasty dividend.
That level of integration is something few other TSX dividend stocks can offer.
Turning to results, Exchange posted results for the first fiscal of 2025 earlier this month. In that report, Exchange reported record revenue of $668 million, with adjusted EBITDA hitting $130 million.
Overall, the company earned $7 million in the quarter, reflecting a $2 million increase over the prior year. On an adjusted basis, Exchange earned $14 million, reflecting a $4 million increase year over year.
Turning to the guidance for the rest of fiscal 2025, Exchange forecasts strong growth to continue, with revenue hitting $2.8 billion.
Prospective investors should also note that Exchange continues its acquisition-focused approach to growth. That includes the announcement to acquire Canadian North Airlines.
Canadian North is a regional carrier operating in over two dozen locations in Canada’s north. Exchange’s $205 million acquisition of the airline will bolster its presence in that key market and introduce additional synergy opportunities.
Let’s talk about that income
One of the main selling points of Exchange as a great TSX dividend stock is the monthly dividend. As of the time of writing, the yield on that dividend works out to a very appetizing 4.57% yield.
This means that investors who can drop $30,000 into the stock (as part of a larger, well-diversified portfolio) can expect to earn a monthly income of just over $110.
For those investors not ready to draw on that income, reinvesting that income will earn two additional shares each month. Throw in the expected growth from the stock, and you have what is not only a great TSX dividend stock but one of the best options on the market.
Also worth noting is that Exchange has committed to providing investors with bumps to that dividend. In fact, the company has provided investors with 17 increases over the past two years.
Will you purchase this TSX dividend stock?
Exchange is a great investment for nearly any portfolio. The company offers strong growth, a tasty monthly dividend and some defensive appeal.
In my opinion, a core position in Exchange should be part of any well-diversified portfolio.
Buy it, hold it, and watch your investment grow.
