Advertisement
Canada markets open in 4 hours 36 minutes

  • S&P/TSX

    22,059.03
    -184.97 (-0.83%)
     

  • S&P 500

    5,567.19
    +30.17 (+0.54%)
     

  • DOW

    39,375.87
    +67.87 (+0.17%)
     

  • CAD/USD

    0.7334
    +0.0002 (+0.03%)
     

  • CRUDE OIL

    82.56
    -0.60 (-0.72%)
     

  • Bitcoin CAD

    78,649.31
    +212.99 (+0.27%)
     

  • CMC Crypto 200

    1,181.82
    +15.70 (+1.35%)
     

  • GOLD FUTURES

    2,380.40
    -17.30 (-0.72%)
     

  • RUSSELL 2000

    2,026.73
    -9.89 (-0.49%)
     

  • 10-Yr Bond

    4.2720
    -0.0830 (-1.91%)
     

  • NASDAQ futures

    20,607.50
    -13.25 (-0.06%)
     

  • VOLATILITY

    12.78
    +0.30 (+2.41%)
     

  • FTSE

    8,219.73
    +15.80 (+0.19%)
     

  • NIKKEI 225

    40,780.70
    -131.67 (-0.32%)
     

  • CAD/EUR

    0.6762
    0.0000 (0.00%)
     

3 Dividend Stocks I’d Buy for Monthly Passive Income

Kay Ng
·4 min read
Payday ringed on a calendar
Image source: Getty Images

Written by Kay Ng at The Motley Fool Canada

Assets that provide monthly passive income are invaluable. Here are a few dividend stocks I’d consider buying for this type of income.

Slate Grocery REIT

Slate Grocery REIT (TSX:SGR.UN) invests 100% in U.S. real estate properties that are anchored by grocery stores. It believes that even with competition from e-commerce, Americans will still continue to shop at necessity-based shopping centres – the kind in the REIT’s portfolio – for their everyday needs.

Besides, even e-commerce requires the facilitation of brick-and-mortar stores for pick-up and delivery of goods to consumers. This implies that Slate Grocery is a defensive real estate investment trust (REIT) with resilient income streams.

ADVERTISEMENT

Its portfolio is comprised of about 117 properties across 15.3 million square feet in 24 states. Kroger and Walmart lead as its top two tenants, making up 9.6% and 9%, respectively, of its gross leasable area.

Steady retail sales growth, strong tenant demand, and low new supply in grocery-anchored centres could support solid rent growth. The REIT’s current in-place rent is about $12.37 per square feet.

At the recent price of $12.19 per unit, Slate Grocery REIT is reasonably priced and offers a high cash distribution yield of 9.5%. If you want a bigger margin of safety, wait for a market correction.

RioCan REIT

Here’s a Canadian REIT that looks interesting. A cash distribution cut in 2021, higher interest rates, and perhaps bad vibes investors are getting from the retail real estate sector, which RioCan REIT (TSX:REI.UN) is primarily in, may be what’s putting the income stock at a discount.

I believe RioCan REIT pays a safe, monthly passive income. First, the retail REIT has a high committed occupancy of 97.5%. Second, its payout ratio is sustainable at about 61% of its funds from operations. Third, it has relatively low debt levels, gaining an investment-grade S&P credit rating of BBB.

At the recent price of $18.60 per unit, it trades at a discount of about 20% from its long-term normal valuation. It also provides a compelling cash distribution yield of 5.8%. RioCan REIT would be a valuable asset to hold in a Tax-Free Savings Account (TFSA) for tax-free income while waiting for price appreciation. Growth could come from the execution of its development pipeline, which includes projects on its existing properties.

Exchange Income

As a company in the industrials sector, historically, the stock of Exchange Income (TSX:EIF) has been impacted by market corrections, which are healthy for the market and investors. Market corrections potentially provide better entry points for investors. The company’s actual earnings have been decently defensive through economic cycles.

At least the dividend stock has a long track record of paying safe dividends. Since starting a dividend in 2004, it has never cut it.

Exchange Income makes acquisitions in aviation services and aerospace, and manufacturing. It has about 18 subsidiaries that deliver essential products and services to niche markets. From these subsidiaries, it earns cash flows and pays out a reliable monthly dividend.

At $45.84 per share at writing, Exchange Income stock offers a dividend yield of close to 5.8%. At this price, analysts also estimate it trades at a meaningful discount of 27% from its intrinsic value. Valuation expansion could drive upside potential of 37% as a result.

The post 3 Dividend Stocks I’d Buy for Monthly Passive Income appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Exchange Income Corporation?

Before you consider Exchange Income Corporation, you'll want to hear this.

Our market-beating analyst team just revealed what they believe are the 10 best starter stocks for investors to buy in 2024... and Exchange Income Corporation wasn't on the list.

The online investing service they've run for a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 32 percentage points. And right now, they think there are 10 stocks that are better buys.

Get Our 10 Starter Stocks Today * Returns as of 12/22/23

More reading

Fool contributor Kay Ng has positions in Exchange Income and RioCan Real Estate Investment Trust. The Motley Fool recommends Kroger, Slate Grocery REIT, and Walmart. The Motley Fool has a disclosure policy.

2024