A 4.1% Monthly Dividend Stock: About $345 a Month on $100,000

Granite REIT (TSX:GRT.UN) is a Canadian industrial REIT with a 4.1% yield, paid monthly.

Andrew Button

Author Bio

Andrew “A.J.” Button is a financial writer with a longstanding interest in value investing and international markets. He began investing at a young age, building a portfolio of dividend stocks to help pay for university. After stepping away from investing for a time, he rediscovered his passion in 2019 when he began working as a freelance financial writer. Since then, Andrew has built a diversified investment approach spanning Canadian, U.S., and international equities, as well as guaranteed investment certificates (GICs) and money market funds. He is particularly interested in international stocks, drawn to their dividend potential and long-term growth opportunities, while maintaining an interest in Canadian businesses. Before joining The Motley Fool, Andrew worked as a freelance copywriter specializing in financial services. He continues to write for financial publications and share his thoughts on stocks through social media.

Education and Professional Credentials

Canadian Securities Course (CSC)
CFA Program Level I examination completed

Areas of Expertise

Value investing, Canadian equities, U.S. stocks, international equities, dividend investing, long-term investing, GICs, money market funds, and portfolio diversification.

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Published November 11, 8:15 pm EST

Are you looking for dividend stocks that pay high yields monthly?

If so, REITs are the pool you want to search in.

Real estate investment trusts are pooled investment vehicles that invest in real estate portfolios, including apartment buildings, office buildings, warehouses, data centres and more.

These companies are well known for their high dividend yields and monthly payouts.

In Canada, REITs are among the best monthly-paying, high-yield “stocks” out there. In this article, I explore one monthly-paying REIT yielding 4.1% that could fill your RRSP or TFSA with income for months to come.

warehouse worker takes inventory in storage room — Source: Getty Images

Granite REIT

Granite REIT (TSX: GRT.UN) is a Canadian REIT that leases warehouse space to companies. It typically leases space to manufacturing companies, e-commerce firms and others that need warehouses. The company does not currently own data centres; however, it has the potential to benefit from Canada’s data centre buildout indirectly through logistics and supply chains. It also owns 61.5 million square feet of leasable space, including some facilities that could be converted to data centres. So, Granite arguably could become an AI data centre beneficiary company.

Performance

Granite REIT has been performing pretty well recently. The company has grown considerably over the year, boasting the following growth metrics in the trailing 112-month(TTM) period:

Revenue growth: 8.9%.
Funds from operations (FFO) growth: 8.6%.
Adjusted funds from operations (AFFO) growth: 7.2%.
EPS growth: 26%.
Dividend growth: 25%.

These are all pretty good growth rates for a REIT. The company has compounded these metrics pretty well over the last five years as well. As mentioned previously, the company’s opportunity set in industrials and distribution suggests that it can continue to deliver in the future.

GRT.UN also scores well on profitability, boasting metrics such as:

Gross margin: 81.7%.
FFO margin: 59%.
AFFO margin: 54%.
EBIT margin: 74%.

Valuation metrics

The metrics above all look pretty good. However, they mean little if GRT.UN is becoming an expensive stock. In order to gauge whether GRT.UN is truly worth the investment, we need to look at valuation metrics. Here are a few I’ve chosen to highlight:

Price/book: 0.81.
Price/cash flow: 13.9.
Price/rental income: 8.2.
P/FFO: 13.7.
P/AFFO: 15.9%

These metrics are below average for the Canadian markets as a whole, indicating that GRT.UN may be a decent value today.

Dividend potential

Last but not least, the part you’re most likely interested in:

Dividend potential.

Granite REIT currently pays a $0.2958 monthly dividend. That works out to $3.55 per year. The REIT costs $85.55 currently. So, the yield is roughly 4.2%. If you invest $100,000 into GRT.UN and the dividend doesn’t change, you get $4,149 worth of dividends per year, or roughly $345 per month.

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY
Granite REIT	$85.55	1,169	$0.2958 per month ($3.55 per year)	$345.79 per month ($4,149 per year)	Monthly

As you can see, you can collect quite a few dividends by investing in Granite REIT, even if the dividend doesn’t change. The company’s past history and opportunity set, however, argue that the REIT’s dividends will, if anything, continue to grow. So, there’s much to love here.