Quality monthly paying dividend stocks smooth out cash flow and make reinvesting easier. Granite Real Estate Investment Trust (TSX:GRT.UN) is one of the few Canadian real estate stocks that offers you a monthly payout, and its most recent quarter gives income investors even more reason to pay attention.
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Is this TSX dividend stock a good buy?
Granite is a Toronto-based real estate investment trust that owns, develops, and manages logistics, warehouse, and industrial buildings. Its portfolio includes 108 investment properties totaling approximately 45.3 million square feet of leasable space, spread across North America and Europe.
E-commerce companies, third-party logistics providers, and manufacturers relocating supply chains closer to home need large, modern warehouse space.
Granite’s buildings tend to be newer, larger, and better-located assets that tenants are chasing, which gives the trust real pricing power when leases come up for renewal.
Granite’s most recent earnings call, led by chief financial officer Teresa Neto and chief executive officer Kevan Gorrie, showed pricing power in action.
Funds from operations (FFO) per unit came in at $1.57, up 7.5% year over year, or almost 9% after stripping out currency swings. AFFO per unit landed at $1.41 for the quarter. Comparatively, the monthly dividend payout is $0.2958, which translates to $0.8874 per quarter, indicating a payout ratio of 63%.
Granite achieved a 23% leasing spread during the quarter, suggesting new and renewed leases are being signed at rents well above what tenants previously paid.
Occupancy improved by 270 basis points year over year, and committed occupancy now sits just under 98%, among the highest in the industrial real estate investment trust (REIT) sector, Gorrie said on the call.
Same-property net operating income, a key measure of how existing buildings are performing without the effects of buying or selling assets, grew 8.3% on a constant-currency basis.
Growth was led by the Greater Toronto Area and the United States, up 22% and 8.8% respectively, while Europe was softer, particularly in Germany and Austria.
Management pointed to a broader trend behind these numbers.
Leasing activity in large-format buildings over 700,000 square feet jumped almost 300% year over year across the industry, according to CBRE data cited on the call, as tenants prioritize bigger, newer, more automation-friendly space.
Granite is positioned squarely in that segment, with 14 availabilities remaining in its portfolio, each averaging 90,000 square feet.
A balance sheet built for the next upgrade
In the last decade, Granite REIT returned nearly 300% to shareholders after adjusting for dividends.
The company reduced its net leverage to 33% from 35% over the last three months, while debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) improved to 6.8 times from 7.3 times.
Morningstar DBRS took notice, confirming Granite’s issuer and debenture ratings at BBB-high in March and moving the trend to positive from stable.
On the call, Neto said management is targeting debt-to-EBITDA to remain below 7.2 times for 12 to 18 months, a level that could eventually make Granite the first A-rated REIT credit in Canada.
Liquidity remains healthy, too, with roughly $1 billion available between cash on hand and an undrawn credit facility.
Management kept full-year FFO per unit guidance unchanged, calling for 6-8% growth over 2025, with no unidentified acquisitions baked into that outlook. Analysts forecast FFO per share to expand from $5.91 in 2025 to $6.08 in 2028, which should translate into future dividend hikes.
The Foolish bottom line
Granite REIT checks the boxes income investors look for. It pays monthly; its payout is supported by growing rents and a portfolio in high-demand markets; and its balance sheet keeps getting stronger rather than weaker.
A yield near 3.6%, paired with high single-digit FFO growth and an improving credit profile, makes this one of the more compelling monthly income stocks on the TSX today.
