Yahoo Finance This 8.2% Dividend Stock Pays Cash Every Month
Written by Amy Legate-Wolfe at The Motley Fool Canada
When it comes to finding a great investment in a solid dividend stock, there are quite a few things to consider. Because even if there is a high dividend yield, that doesn’t mean anything if a company can’t sustain it.
So today, we’re looking at a dividend stock that can. One that has a dividend yield with the fundamentals to keep it going. What’s more, it continues to offer value with shares far below fair value. So let’s get into it.
Consider industrial REITS
First off, let’s narrow our focus on industrial real estate investment trusts (REIT). While REITs are strong choices for a dividend stock in general, industrial REITs are arguably the best. Most offer monthly dividend income, and within an industry that remains high in demand.
Industrial spaces are needed with the rise in the ecommerce sector, especially for the logistics and distribution centres. Therefore, industrial REITS offer a way to get in on this growth, while still benefiting from stability. That stability comes from the need for fewer tenants and long-term contracts as well.
This provides investors with long-term income streams as well, along with growth both organically and through acquisitions and the building of more properties. Plus, industrial REITs offer diversification if you find the right one. These companies can span the globe, and in many cases do.
Finally, industrial REITs provide investors with strength even in the face of high inflation. As costs of goods rise, the value of these assets grows as well. Even as interest rates rise, these companies are set up for superior growth. But this one is among the best.
Nexus REIT
Of the industrial REITs, I believe that Nexus Industrial REIT (TSX:NXR.UN) offers the highest dividend, for the most value. Shares of Nexus stock are trading down 19% year to date. However, shares have come back up recently after the company reported strong earnings results.
Shares of Nexus stock are now up 33% since bottoming out in October. The company reported many pieces of great news for investors. This included the acquisition of industrial property for $55.8 million, along with another property back in July for $48.4 million.
Occupancy held at 97%, with net operating income climbing 17.9% to $29.3 million over 2022 results. Net asset value (NAV) per unit also climbed to $12.89 from $12.49 the year before. Plus, its debt to total assets reach 48.5%, only slightly higher than the 48% back in June.
Bring in strong passive income
Nexus REIT therefore provides some strong growth from both dividends and returns in the near future. The stock offers immense value as well, trading at just 4.5 times earnings as of writing. Plus, the company has a stable payout ratio at just 36%. In fact, the company could therefore increase the dividend in the near future considering how well it’s doing.
For now, let’s say you were to put $7,000 into this industrial dividend stock. You then see it return to 52-week highs, and continue to bring in that strong dividend income. Here is what that could look like.
COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
NXR.UN – now | $8 | 875 | $0.64 | $560 | monthly | $7,000 |
NXR.UN – highs | $11.25 | 875 | $0.64 | $560 | monthly | $9,843.75 |
So there you have it, you could achieve passive income of $2,843.75 in returns and $560 in dividend income! That’s a total of $3,403.75 in passive income for those seeking monthly income on the TSX today.
The post This 8.2% Dividend Stock Pays Cash Every Month appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Nexus Industrial REIT. The Motley Fool has a disclosure policy.
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