The only thing better than an income-producing investment is one that pays out on a monthly cadence. And while there’s no shortage of monthly payers to consider on the market right now, there is one dividend stock worth considering that should be mentioned.
This dividend stock worth considering offers a stable business that continues to grow and supports a generous payout over the long term.
That stock is CT Real Estate Investment Trust (TSX: CRT.UN), and here’s why it belongs in your portfolio.
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Why CT REIT is a dividend stock worth considering
For those unfamiliar with the company, CT REIT is one of the better-known Canadian REITs. The company owns a portfolio of retail properties across Canada, with Canadian Tire serving as its largest and most important tenant.
That relationship is important. That relationship is important. Canadian Tire stores operate on long-term leases and occupy large locations, providing CT REIT with a predictable rental revenue stream.
That makes the business model easy to understand and potentially lucrative for investors. CT REIT’s portfolio comprises approximately 380 properties, of which over 90% are occupied by Canadian Tire. Even better, those properties are under long-term leases with built-in rent escalators.
CT REIT’s occupancy rate is among the best on the market. In the most recent quarter, the REIT reported a portfolio occupancy rate of 99.5%.
The monthly distribution looks well supported
The main reason why CT REIT is a dividend stock worth considering is that monthly distribution.
As of the time of writing, the REIT offers a yield of 5.37%. That works out to a monthly payout of $0.0818 per unit, or $0.98 per unit on an annualized basis.
For investors with $15,000 to invest in the REIT, that works out to just over $820 in annual income. While that’s not enough to retire on, it is enough to generate a few new units each month from reinvestments alone.
Better still, that distribution continues to grow. CT REIT announced a 3.5% distribution increase earlier this year, representing more than a decade of annual increases to that monthly payout.
And the underlying business is capable of supporting that payout.
During the most recent quarter, adjusted funds from operations (AFFO) increased 3.3% year over year to $78 million. On a per-unit basis, AFFO increased 2.5% to $0.326.
CT REIT’s payout ratio came in at 72.7%, which leaves a decent cushion between what the REIT generates and what is distributed to investors.
For income-seekers, that combination of a 5% yield, monthly payments, and a manageable payout ratio makes the REIT a dividend stock worth considering, if not hard to ignore.
Is CT REIT worth considering for monthly income?
All stocks, even the most defensive, carry risk. In the case of CT REIT, that risk is the dependency on Canadian Tire.
That being said, the REIT offers an attractive yield, steadily rising distribution, a payout ratio below 75%, and an occupancy rate north of 99%.
Those facts are hard to ignore, especially for long-term income investors.
In my opinion, CT REIT is a dividend stock worth considering as part of a larger, well-diversified portfolio.
Buy it, hold it, and watch your portfolio income grow.
