These days, investors are back on the income bandwagon. We want investments in companies that are going to pay us to wait while they recover or climb higher. In this case, there’s one dividend stock showing value right now that could be a strong investment for long-term buyers, especially with a solid monthly dividend. So, let’s look at why Exchange Income (TSX: EIF) might belong in your portfolio as shares climb past 22% year to date.
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The good
First, let’s look at the good news that’s caused this top monthly dividend stock to climb higher and higher in 2025. During the second quarter, the dividend stock reported record revenue of $720 million. Furthermore, it saw adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) hit $177 million. Add in free cash flow of $123 million and updated 2025 adjusted EBITDA guidance of $725 to $765 million, and the company came in hot this quarter.
What’s more, the dividend coverage looks quite reasonable given the operating metrics. It trades at an adjusted net-earnings payout ratio of about 81%. This level shows the dividend is well supported by cash flow. Therefore, the dividend stock is free to expand, which it has done by entering into a 10-year agreement with Nunavut air service company Canadian North, adding to recurring revenue. After all this, the dividend stock still trades at an attractive 15.6 times earnings.
Considerations
Before you go ahead and buy in bulk, there are always items to consider. While the yield is great, it’s not all that high at 3.6%, especially considering an average 5.3% yield over the last five years. So, it’s income, but not a huge yield play. Furthermore, the stock holds total debt at $2.47 billion, with reported debt-to-equity (D/E) metrics at 170%. So, even though debt remains near historical lows according to management, watch net debt to make sure there’s still room for yield support and acquisitions.
Furthermore, there is a risk from cyclicality and integration. The aerospace and aviation, as well as manufacturing industries, have cyclical exposure. This has recently been seen from tariffs, capital spending, weather, forest fires, medevac volumes and more. And, of course, the Canadian North acquisition will come with integration risk. When all is said and done, investors will need to make sure free cash flow remains strong, with operating cash flow converting into distributable cash at a consistent pace.
Structuring the stock
EIF can certainly be a core dividend holding. It holds a good balance of cash flow, dividend-growth potential, and strategic assets and investments. However, you just won’t want to rely on it as your only income source. Instead, consider dollar-cost averaging (DCA) rather than putting in a lump sum payment. That’s especially as the company continues to see how the acquisition will pan out.
Investors will then want to monitor its payout ratios, free cash flow, debt, and the execution of that Canadian North acquisition. Opportunistic investors, however, will do well to add on alerts for when this stock makes a dip in share price, getting in on a deal that could improve your overall portfolio. For now, an investment of $7,000 could yield something like this for investors.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| EIF | $72.32 | 97 | $2.64 | $256 | Monthly | $7,015 |
Bottom line
Altogether, EIF offers a fundamentally solid, cash-strong business and a stable, if modest, dividend. What’s more, that dividend comes out monthly, adding substantial value for investors wanting regular income. Using DCA, your position size can remain reasonable and bring down risk, adding long-term value for lifelong investors.
