Over the last few years, I wouldn’t blame investors if they decided to keep their money in cash, or at least put it in guaranteed investment certificates (GICs). After all, interest rates were high, offering incredible yields. All while we went through a pandemic, trade wars, surges in the market, only to be met by another drop.
Fast forward to today, and you might be sitting on a wad of cash without knowing what to do with it. After all, interest rates are now down to 2.5%, with hints at future rate cuts. Given this, a GIC doesn’t look as attractive, which is why if I had that cash ready to go in a Tax-Free Savings Account (TFSA), I’d put it in Granite REIT (TSX:GRT.UN).
A solid dividend
The main reason I’d consider GRT is for its dividend. When choosing a dividend stock, investors will want to assess the history of dividend payments, looking for a pattern of consistent or growing dividends. After all, frequent cuts or omissions can show that there is financial instability. For GRT, that’s simply not the case.
GRT offers a forward dividend of 4.32% as of writing, with a solid history of stable dividend payments. And those payments? They come out every single month for income-focused investors. Furthermore, its payout ratio sits at a sustainable 62.35% at writing, so there’s even more room for reinvestment or future dividend growth.
What’s more, the dividend stock holds a stable balance sheet. Investors want a dividend stock with solid metrics like debt-to-equity (D/E) ratios and operating margins. For GRT, these are certainly stable with a 75.75% operating margin and 56.35% profit margin. Furthermore, it has a stable 61.5% D/E ratio. That leverage can enhance returns, while still meeting short-term obligations and keeping the dividend healthy.
Growth potential
All that’s great for now, but investors want income that lasts. This means finding a dividend stock with the potential for growth while still remaining stable. Companies with a competitive advantage ensure long-term stability and revenue generation. Therefore, look for a dividend stock that has historical performance and future growth available, analyzing revenue growth and occupancy rates.
For GRT, it focuses on industrial and logistics properties, which are certainly in high demand. GRT seems to now have a solid market niche, with an occupancy rate of 95.8% and committed occupancy of 96.5%. Recent acquisitions and strategic positioning in logistics properties also show the potential for growth.
The true benefit here is the industrial property focus. GRT leverages the e-commerce boom, where demand for warehouses and distribution centres continues to grow. Recent acquisitions support future growth and lead to a dividend yield that should only grow in time.
Bottom line
GRT is a stable dividend stock that can offer huge income in a stable sector. Income that comes in monthly! In fact, here’s what $88,000 could bring in each and every year as of writing.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| GRT.UN | $77.26 | 1,139 | $3.40 | $3,873 | Monthly | $87,990 |
That’s $3,873 each year, or $323 per month! So, not only are you gaining dividend income, but you’re also getting growth in a sector that’s rapidly expanding. Therefore, now is the time to stop sitting on that cash and start investing once again.
