A monthly payment is convenient when your bills arrive monthly, too. The harder part is choosing a business that can keep making the payment without asking shareholders to accept too much risk.
My pick for a balanced monthly-income position is Granite REIT (TSX: GRT.UN). It isn’t the highest-yielding choice, but its appeal is a combination of industrial properties, a manageable reported payout, and a price that provides a useful income starting point.
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What makes a payment useful
A real estate investment trust (REIT) owns properties and distributes income to investors. Granite’s tenants use warehouses, logistics facilities, and industrial buildings across North America and Europe. Rent helps fund the distribution.
That matters more than the calendar. A monthly payer with weak tenants or expensive debt can be riskier than a quarterly payer with stronger finances. The best choice needs to earn its income after keeping its buildings useful and meeting financing costs.
Granite declared a monthly distribution of $0.30 per unit. Annualizing that exact rate gives $3.55. At a recent price of $83.70, the annualized yield was about 4.2%.
What the stock buys
A $25,000 budget at that price bought 298 whole units for $24,942.60. Those units generated about $88.15 monthly, or $1,057.78 annually, assuming no change in the payment. Trading costs and taxes are excluded.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| GRT.UN | $83.70 | 298 | $3.5496 | $1,057.78 | Monthly | $24,942.60 |
The payout has a useful operating foundation. Granite reported second-quarter adjusted funds from operations (AFFO) of $1.26 per unit. This measure estimates recurring property cash available after certain adjustments and maintenance needs, but isn’t ordinary accounting profit.
Three monthly payments total $0.89, so dividing that by $1.26 from the dividend produces a payout of about 70.4%. Therefore, Granite distributed roughly 70 cents of each dollar measured by that cash-flow figure.
That leaves a cushion, and also explains why ordinary earnings, which can move with property valuations, are less useful on their own for judging a REIT distribution. Good dividend investing starts with the cash supporting the payment.
My buy price
My preferred buying range is $80 or below, an investment judgment based on the declared distribution rather than a prediction that the market will fall in that range. At $80, the annualized yield rises to about 4.4%. The same $25,000 budget then buys 312 units for $24,960, producing $92.29 monthly. That’s about $4.14 more each month than the current example. A lower entry price helps, but waiting indefinitely to gain a few dollars can also leave money idle.
A modest purchase around $83.70 is therefore reasonable for a patient investor, but $80 offers a better income entry. The main risks are tenants leaving, weaker leasing demand, borrowing costs, and currency changes. Granite’s international footprint spreads property exposure, but it adds foreign-currency and tax considerations. The reported cash measure can also include adjustments that differ between companies.
Eligible units held in a Tax-Free Savings Account (TFSA) can provide income without Canadian tax on the withdrawal. That improves the usable payment, although it doesn’t guarantee the unit price or eliminate foreign-tax issues. The buy-price comparison assumes the distribution remains unchanged. If cash generation weakened enough to require a cut, the income advantage of a cheaper entry could disappear. Granite’s reported cushion makes the current case credible, while keeping the position diversified protects against that possibility.
Bottom line
Granite is my monthly-income pick as the payment comes with a meaningful reported cash-flow cushion. Around $83.70, it offers a reasonable starting yield. Yet at $80, the income case improves. It belongs alongside other holdings, with the monthly distribution treated as investment income and the capital given time to recover from market swings.
