If you like earning tax-free income from dividend stocks, the TFSA (Tax-Free Savings Account) is the smartest place to invest. Inside the account, all income (interest, dividends, and capital gains) is tax-free.
Simply investing inside the TFSA can give you an immediate 10-20% boost on your annual returns. Over a lifetime, that extra 10-20% can add up to thousands of dollars.
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Dream Industrial REIT: A safe 5% monthly dividend stock
Increasingly, there are fewer and fewer stocks paying dividends monthly. However, if you dig down, you can find some really good-quality businesses that distribute monthly. One of those dividend stocks is Dream Industrial Real Estate Investment Trust (TSX:DIR.UN).
Real estate investment trusts (REITs) like Dream collect rents monthly. They are required to distribute 90% of their income to maintain their flow-through tax status, so most REITs distribute a majority of their rental income monthly.
Dream operates and manages over $16 billion worth of industrial properties across Canada, the United States, and Europe. It directly owns around $7 billion of those properties.
The REIT has a focus on multi-bay, centrally located distribution, warehousing, and logistics assets. It has close to 1,500 different tenants, with its top 10 tenants only taking 12% of its occupier base. This just means it has a wide economic exposure that is not overly reliant on any one tenant or industry.
Dream is sitting at 94% occupancy. Much of this is just transitory as new acquisitions get leased and natural portfolio turnover occurs. The good news is that REITs’ average in-place rents are about 15% below market. That means that it will see a nice rental uptick as it leases up those spaces.
Dream expecting strong results in 2026 and 2027
In fact, management remains quite bullish on 2026. In its recent second quarter, Dream raised its forecast for net operating income (NOI) growth to be between 7% and 8%. That is a considerable improvement from the 5.7% NOI growth set in 2025.
The REIT continues to believe it can grow funds from operations (FFO) per unit (a key real estate profitability metric) by 4-5% this year. Part of the reason for FFO per unit dragging NOI growth is due to its debt portfolio rolling over to slightly higher-rate debt and also the near-term delay in deploying new joint venture proceeds.
That reminds me of one of the biggest risks with owning any REIT stock. They are heavily leveraged. Rising interest rates tend to put downward pressure on REIT valuations. While most of Dream’s debt is locked in and maturities are staggered over the coming five years.
This dividend stock is attractive right now because it is one of the cheapest industrial REITs in North America. Despite improving key performance metrics over the past five years, it trades at a 17% discount to its private market value. This helps limit one’s downside when buying this stock.
A top monthly dividend stock if you like real estate
While one waits for that discount to abate, you get to collect a very nice 5.1% yield. In fact, given its declining payout ratio (around 63%), the REIT increased its distribution by 2.5% this quarter.
Today, Dream pays a $0.06 per unit distribution every month. For context, a $10,000 investment would earn around $43 every single month (or $514 annualized). If you like safe, predictable monthly income and like real estate (without any management), this is a great stock to hold in a TFSA.
