Can the stock market give you assured returns? This is a question most risk-averse investors ask. They keep delaying investment in the stock market because of risk. The idea of knowing that you will get a fixed amount on maturity is as reassuring. But this assurance of the return comes at a cost, which is a hidden risk many don’t realize. For instance, a stock pays a 6.5% annual dividend yield while a five-year non-redeemable Guaranteed Investment Certificate (GIC) gives a 3.95% annual interest.
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The 6.5% dividend stock vs. GIC
A $10,000 investment in a GIC will give you $2,137 interest after five years. The same amount when invested in a 6.5% dividend stock will give you a cumulative dividend of $2,985 in five years.
Moreover, this dividend amount is divided over 60 months with a monthly payout of $49.75. Whereas if you opt for the redeemable GIC, the interest rate reduces to 2.25% and the tenure reduces to three years. The value of your money is only meeting the inflation rate in GIC, and not increasing your purchasing power.
Another plus point of investing in a dividend stock is that if the business is good, you can get a higher dividend. However, there is a risk of fluctuation in the principal amount. So, if your investment goal is to get cash every month and keep your principal amount invested for years, a dividend stock is a better option as it can even grow your money with inflation.
Dividend stocks that pay cash every month
Where can you find such a dividend stock?
Retail REITs made a strong comeback after the pandemic, as e-commerce could not replace the in-store experience. New constructions have been low in the retail pace, creating a supply shortage. Moreover, Canada’s tighter zoning bylaws mitigate the risk of retail store oversupply, keeping rent high.
All the above factors helped RioCan REIT (TSX:REI.UN) to recover from the pandemic-induced dividend cut and grow.
This dividend stock gives an annual yield of $6.5%
In 2021, the REIT slashed dividends by 33% as occupancy rate fell and rental income decreased.
| Year | RioCan Dividend ($) | % Increase |
| 2025 | 1.1540 | 4.2% |
| 2024 | 1.1075 | 3.0% |
| 2023 | $1.075 | 5.9% |
| 2022 | $1.015 | 5.7% |
| 2021 | $0.960 | -33.3% |
| 2020 | $1.440 | 0.0% |
The dividend cut helped RioCan preserve cash and withstand the crisis. Hence, when the lockdown eased and stores reopened, it had the financial flexibility to grow its dividend every year. At 61.2%, RioCan has a lower dividend payout ratio than the industry. While it is growing dividends, it is also reinvesting the remaining cash to grow organically.
Last year, RioCan vacated 10 units due to two tenant failures, of which it leased nine units to new, stronger tenants at 24% higher base rent. In the first quarter of 2025, one of its tenants, Hudson’s Bay, commenced proceedings under the Companies’ Creditors Arrangement Act (CCAA). The REIT had to write off $208.8 million in RioCan-Hudson’s Bay joint venture (JV), resulting in a net loss of $84.16 million in the first quarter.
RioCan has factored in the effect of the JV and reduced its 2025 guidance for funds from operations (FFO) to $1.85 to $1.88, from the previous $1.89 to $1.92. The revised FFO is 4% higher than last year, helping RioCan sustain its dividend-payout ratio at 62%.
Behind the better guidance are its new leasing spread of 39.4% and a higher retention rate of 93.5% in the first quarter of 2025. The REIT is deleveraging its balance sheet by repaying construction loans using the proceeds from the sale of residential inventory and condominiums.
While there is a risk of tenants defaulting, there is also an opportunity of leasing to new, stronger tenants at a higher lease. And it has over $1.4 billion of liquidity to thrive through the transition.
How to maximize your monthly cash flow
RioCan still has room to grow dividends. It has been paying regular monthly dividends for the last 15 years, with just one dividend cut during the pandemic. You can invest $10,000 in this REIT and earn $49.75 every month. You can either use this money for daily expenditure or use it to buy other monthly dividend stocks, like Timbercreek Financial, which has an 8.8% dividend yield.
