This 7.5% Monthly Dividend Stock Wants to Prove It’s More Than Just a High Yield

Firm Capital’s 7.5% monthly yield looks tempting, but the real story is whether improving cash flow and new deals can sustain it.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published June 25, 9:00 pm EDT

| More on: FCD.UN

Key Points

Firm Capital pays a 7.5% monthly yield and trades about 13% below its stated NAV.
Cash flow is improving, but the payout still runs near 100% of AFFO.
A new manufactured-housing push targets stable occupancy and steadier rent growth, especially in Alberta and Saskatchewan.

A monthly 7.5% yield gets attention fast. But with Firm Capital Property Trust (TSX:FCD.UN), the better point could be whether the trust can keep improving its cash flow, grow its real estate portfolio, and give investors a reason to believe the market is undervaluing the units. For CEO and President of Firm Capital Robert McKee, the real estate investment trust (REIT) may be the answer.

concept of real estate evaluation — Source: Getty Images

A real appeal

In an interview with Motley Fool Canada, the message was clear from McKee. This is not meant to be a get-rich-quick real estate stock. It’s built for investors who want income, real estate exposure, and some growth over time.

“We’re not going to make anybody rich overnight,” McKee said.

That said, it looks like a steal based on today’s numbers. Firm Capital trades below its reported net asset value (NAV) of $7.98 per unit at writing by 13%, and is expanding into a real estate category with high occupancy and defensive demand.

Yet Firm Capital’s current appeal starts with the monthly distribution. The trust pays $0.04 per unit each month, or about $0.52 annually, putting the yield near 7.5%. For investors looking to turn savings into steady cash flow, that’s the number that makes the stock worth a closer look.

The recent earnings picture also helped. In the first quarter of 2026, Firm Capital reported a 5% increase in net operating income to $9.9 million. Adjusted funds from operations (AFFO) per unit rose 10% to $0.13, which gives investors a better look at the cash flow supporting the distribution. And the great news? It should only get better from here, McKee said.

An improving situation

Firm Capital’s AFFO payout ratio improved to 101%, down from 111% a year earlier, after a winter that didn’t bring in the usual higher costs. Management’s target is 85% to 95%. So the trust isn’t fully where it wants to be yet, but it’s moving in the right direction, and the better test may come later in the year.

“We should be under 100 for the year, based on our forecast,” McKee said.

McKee also said that once the trust gets into the 90% payout-ratio area, management tends to look at whether it can raise the distribution. That would continue a longer pattern as Firm Capital raised its distribution nine times over the years, despite slower growth than some larger REITs.

More to come

The bigger growth story now is Firm Capital recently cleared the Competition Bureau inquiry for its planned acquisition of 50% interests in 10 manufactured housing communities in Alberta and Saskatchewan. The portfolio includes 1,649 sites and carries a $218 million purchase price, excluding transaction costs. Even better? McKee called it “one of the most stable real estate assets you can own.”

That stability showed up in Firm Capital’s numbers. Manufactured home community occupancy was 99.6% in the first quarter. By comparison, commercial occupancy was 93.4%, and multi-residential occupancy was 94.8%.

The deal also increases exposure to Alberta and Saskatchewan, markets without the same rent-control structure as Ontario, Quebec, and the Maritimes. That gives Firm Capital more room to grow rent over time, though McKee said the new portfolio is already institutionally maintained and close to market rent. Investors should not expect huge rent jumps from these assets, but steadier growth, high occupancy, and more scale.

That scale is important, as McKee said Firm Capital has about a $250 million market cap today, but over the next 5 to 10 years it needs to move first toward $500 million and eventually toward $1 billion to stay relevant with larger investors and wealth platforms.

Foolish takeaway

For investors who want a growth stock, this probably isn’t it. For those looking for monthly income backed by a diversified real estate portfolio, Firm Capital deserves a spot on the watch list. In fact, even $7,000 in the dividend stock can bring in ample income.