No one is surprised if many Canadian investors own shares of the country’s Big Six banks. The financial crisis in 2008–09 was the litmus test; all of them emerged unscathed compared to their US counterparts. Any of these bank stocks can be an anchor in an investment portfolio.
While regulatory standards to ensure stability did not change, the market dynamics did. Non-bank lenders, particularly mortgage investment corporation (MICs), have become an alternative to bank stocks.
Anyone investing for income may want to consider MCAN Mortgage Corporation (TSX:MKP) and Atrium (TSX:AI). Their core business is mortgage lending. Besides the relatively cheap share prices, these MICs have higher dividend yields than the Big Banks. Performance-wise, the stocks have been remarkably steady throughout this year.
Resilient portfolio
MCAN takes pride in its resilient portfolio, notwithstanding the prevailing market conditions and related uncertainties. Mortgage brokers and industry partners help the $868.3 million MIC serve clients and manage risk profiles. The provision for credit losses (PCLs) has risen as a precautionary measure, although delinquencies remain insignificant.
The target borrowers are established developers with good track records and credit history. These clients become repeat customers eventually. MCAN’s lending activities are highly concentrated around Alberta, B.C., and Ontario, where demand for builders is strong and housing is more affordable.
In Q2 2025, net income increased 2% and 22% to $20.2 million compared to Q2 2024 and Q1 2025, respectively. MCAN’s CEO, Derek Sutherland, said, “We have achieved growth in our residential mortgage portfolio without sacrificing our credit profile.”
Sutherland added that the diversified asset base generates strong shareholder returns across real estate market cycles. The good thing about MCAN and other MICs is that they are more familiar and more experienced in the real estate sector than banks.
At $21.47 per share, the stock is up 25.2% year-to-date, while investors partake in the generous 7.6% dividend. MCAN’s dividend track record is 29 years (1996 to 2025) and counting.
Low-risk profile
Atrium’s revenue has grown consistently alongside its mortgage portfolio since 2013. This $554.3 million MIC is highly conservative to preserve a low risk profile. The mortgages are secured by residential, multi-residential, and commercial real estate properties. Nearly 97% of the total portfolio is first mortgages, with an average loan-to-value of 61.3%.
In the first half of 2025, net income increased 6% to $25 million, while provision for mortgage losses dropped 72% to $2.3 million from a year ago. Its CEO, Rob Goodall, said, “We continue to generate earnings per share well above our dividend.”
If you invest today, AI trades at $11.26 per share (10.6%-plus year-to-date) and pays a lucrative 8.3% dividend. Also, the payout frequency is monthly. Atrium began paying monthly dividends in 2020, and each year, the MIC declares special dividends on top of the regular dividends. That payout is a great benefit.
Canadian Income Tax Act
The Canadian Income Tax Act requires MICs to pay their net income to shareholders as dividends. By doing so, they can deduct the payouts from taxable income. The result is significantly lower income tax, if not zero. Whether you pick MCAN or Atrium, you’d have recurring income streams. Maybe the deciding factors are the yield and payout frequency.
