If you want a regular cash flow that can adjust to inflation and sustain your purchasing power, look for a business that earns money in that manner. A recurring cash flow comes from dividend stocks. You need a business that has a moat and whose revenue is a monthly expense for others.
Broadband, utilities, rent, groceries, and gas are some of the necessities that eat up on your monthly cash flow. Thus, these companies make a perfect investment for cash flow planning. Those with manageable debt and financial flexibility can give you some of the best returns.
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This 5% dividend stock is my go-to for cash flow planning
CT REIT (TSX: CRT.UN) is my go-to stock for cash flow planning for three reasons:
- It has had consistent monthly dividend payments for the last 13 years since its initial public offering (IPO).
- Its average annual dividend growth rate of 3%.
- The dividend reinvestment plan (DRIP) with monthly compounding.
The REIT has structured its returns for investors seeking regular cash flows, as its unit price doesn’t grow much. CT REIT manages to give such returns because its business model is designed in that manner. It acquires, develops, and manages real estate for its parent, Canadian Tire, in return for rent. It even receives upfront payment from the retailer for the development of stores. The monthly rent is transferred to unit holders after deducting operating expenses. CRT.UN pays 72–75% of its adjusted funds from operations as dividends.
The business model has lower risk than other REITs, as CT REIT doesn’t have to worry about the occupancy rate. More than 90% of its space is occupied before it begins development of the store. The only major risk for CT REIT is concentration risk. Its revenue is tied to Canadian Tire. If the parent company downsizes, the REIT will feel the impact.
However, CT REIT has limited its downside by keeping its debt within a manageable limit of 39% of the total assets.
How to efficiently invest in CT REIT
CT REIT offers a DRIP that allows you to buy more income-generating units from the dividend income. In Canada, dividends are taxed. But if you invest in CT REIT through a Tax-Free Savings Account (TFSA), you can avoid dividend tax. And if you opt for a DRIP, you can avoid brokerage fees, as DRIP shares are directly issued by the company without a broker.
CT REIT gives you additional DRIP shares worth 3% of the reinvested distributions. So, if you reinvested $100 worth of distribution, you get DRIP shares worth $103. This 3% bonus, plus monthly reinvestment and 3% annual dividend growth helps accelerate the effect of compounding. In fact, the CT REIT chief executive officer has announced 3.5% dividend growth to $0.982 per unit from July 2026.
A $10,000 investment in CT REIT can earn you $45 in monthly cash flow
If you invest $10,000 today, you can buy 555 units of CT REIT for around $18 per unit and get $545 in annual distributions or $45.40 in monthly distributions. Assuming the REIT maintains an $18 unit price throughout the year, you will get 2.6 DRIP shares in August on a distribution of $46.78, after adding a 3% bonus.
| Year | CT REIT monthly distribution per share | Total CNQ shares for $18 per share | Monthly Dividend | DRIP shares @ $18/unit | Reinvested dividend after adding 3% DRIP bonus |
| Jul-26 | $0.08 | 555.00 | $45.42 | 2.60 | $46.78 |
| Aug-26 | $0.08 | 557.60 | $45.63 | 2.61 | $47.00 |
| Sep-26 | $0.08 | 560.21 | $45.84 | 2.62 | $47.22 |
| Oct-26 | $0.08 | 562.83 | $46.06 | 2.64 | $47.44 |
| Nov-26 | $0.08 | 565.47 | $46.27 | 2.65 | $47.66 |
| Dec-26 | $0.08 | 568.12 | $46.49 | 2.66 | $47.89 |
| Jan-27 | $0.08 | 570.78 | $46.71 | 2.67 | $48.11 |
| Feb-27 | $0.08 | 573.45 | $46.93 | 2.69 | $48.34 |
| Mar-27 | $0.08 | 576.14 | $47.15 | 2.70 | $48.56 |
| Apr-27 | $0.08 | 578.83 | $47.37 | 2.71 | $48.79 |
| May-27 | $0.08 | 581.54 | $47.59 | 2.72 | $49.02 |
| Jun-27 | $0.08 | 584.27 | $47.81 | 2.74 | $49.25 |
In a year, the DRIP can buy you almost 30 units for just staying invested and increase your monthly payout by $2.40. In 10 years, it will be more than 300 units, as the additional units will also earn distributions. Since a TFSA allows your money to grow tax-free and a DRIP removes brokerage costs, you get a higher amount.
