Are you looking for high yield dividend stocks that pay monthly?
If so, real estate investment trusts (REITs) are the pile you want to look in.
Although legally more like funds than stocks, REITs are stock market-traded instruments that typically pay high, monthly income. Due to their unique legal structure, REITs have an enormous tax advantage: as long as they pay over 90% of their profit out as dividends, they pay no taxes. This is a big advantage for REITs that few other investment vehicles have. In this article, I will explore a monthly pay TSX REIT that has a 4% dividend yield and many other desirable characteristics.
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Killam Apartment REIT
Killam Apartment REIT (TSX: KMP.UN) is a Canadian apartment REIT that invests in residential apartment buildings. Apartment REITs are desirable because demand for their units is much more predictable than that for other types of REITs. Whereas investors in mall REITs often have to worry about whether malls will still be relevant in 10 years, investors in apartment REITs can rest easy knowing there’ll always be demand for shelter. That doesn’t mean there aren’t sometimes issues with apartment REITs, but it does make them comparatively stable and predictable, all other things the same.
Recent earnings
We can start our analysis of Killam Apartment REIT by looking at its most recent earnings release.
In the first quarter, KMP.UN delivered:
- $59 million in net operating income (NOI), up 7.2% year over year.
- A 6.6% increase in same property revenue.
- A 7.8% increase in same property NOI.
- $0.28 in FFO per unit, up 7.7%.
- A 97.5% occupancy rate.
Overall, it was a decent showing. The growth was not off the charts but, as I’ll show momentarily, that’s not necessarily a problem given the cheap valuation that KMP.UN trades at.
Valuation
Valuation is one thing that Killam Apartment REIT has going for it. At today’s price, it trades at:
- 9.3 times estimated forward earnings.
- 0.67 times book value.
- 17.6 times adjusted funds from operations.
- 14.8 times funds from operations.
Overall, KMP.UN is a pretty modestly valued REIT, suggesting that investors could get a decent return on their investment in it.
The dividend
Last but not least, it’s worth exploring Killam Apartment REIT’s dividend.
KMP.UN pays a monthly dividend of $0.06. At today’s price ($18), the yield is approximately 4%. This is an above average yield for TSX stocks today. If you invest $100,000 into KMP.UN you’ll get $4,000 back in annual dividends, assuming the payout isn’t cut. See the table below for how that works.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Killam Apartment REIT | $18 | 5,555 | $0.06 per month ($0.72 per year) | $333.33 per month ($4000 per year) | Monthly |
Foolish takeaway
If you’re looking for monthly passive income, REITs are often the way to go. They pay consistent monthly income, often have high yields, and are based on real estate – one of the most reliable asset classes on earth. If you’re looking into REITs, you could definitely consider an apartment REIT like Killam Apartment REIT, as they are among the most stable categories of REITs out there.
