One of the best things about investing, in my opinion, is earning a dividend. That payment, when reinvested, can turbo-charge any portfolio over the longer term. It can also provide a juicy recurring income that beats any savings account, provided the right investment is picked.
And that right investment to consider today, which handily beats any savings account, is a monthly dividend payer called Exchange Income Corporation (TSX: EIF).
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Meet Exchange
For those unfamiliar with the company, Winnipeg-based Exchange is an acquisition-focused company. Exchange operates over a dozen subsidiaries, which are broadly grouped into two areas comprising aviation and manufacturing.
The aviation segment provides unique yet necessary services, including passenger and cargo air services to Canada’s remote northern regions. That uniqueness extends to the company also operating the largest flight school in Canada.
Turning to the manufacturing segment, the company continues to benefit from unique niches. Examples from that segment include cell tower fabrication services and custom manufacturing services for the defence sector.
Across both classes, Exchange provides products and services that are in demand, serve a niche of the market, and have little or no competition.
Perhaps more importantly, each of those subsidiaries generates cash for the company. And it’s that cash which allows Exchange to continue investing in additional acquisitions and pay out a handsome monthly dividend that beats any savings account.
Turning to results, Exchange isn’t due to report on the next quarter for a few more weeks. Until then, we can turn back to the first fiscal report released back in May.
In that quarter, Exchange reported record first-quarter revenue of $668 million. This represents a whopping 11% increase over the prior period. The company also reported free-cash flow of $81 million, reflecting a staggering 32% increase over the prior period.
And Exchange continues to grow. The company announced the acquisition of Newfoundland Helicopters during the quarter and is seeking regulatory approval for acquiring Canadian North Airlines.
In other words, Exchange continues to perform well and expand. But what about that dividend income, which beats any savings account?
Exchange’s monthly dividend is a real gem
One of the main reasons why investors continue to flock to Exchange is for the monthly dividend the company offers.
As of the time of writing, Exchange boasts an impressive 4.2% yield. This means that investors who drop $25,000 into the stock can expect to generate an income of just over $1,000, or $83 per month.
Add that investment into your TFSA, and it suddenly becomes tax-free.
Keep in mind that investors who aren’t ready to draw on that income can choose to reinvest it. This allows any eventual income to continue growing on autopilot thanks to the magic of compounding.
That handily beats any savings account return. Even better, that’s not even the best part.
Exchange continues to see strong growth. The stock surged a whopping 37% over the trailing 12-month period. Furthermore, Exchange continues to provide near-annual bumps to that dividend.
In fact, over the past two decades, Exchange has hiked that monthly dividend 17 times.
Exchange beats any savings account. But will you buy?
No stock is truly without some risk. Even Exchange, with its portfolio of subsidiaries, carries some risk. That’s why the importance of diversifying cannot be stated enough.
Fortunately, Exchange’s diversified business mix minimizes that risk while providing a juicy monthly dividend that beats any savings account.
In my opinion, Exchange is a great option for long-term investors to consider adding to any well-diversified portfolio.
Buy it, hold it, and watch your future income grow.
