Written by Amy Legate-Wolfe at The Motley Fool Canada
Before I even begin, it’s important to note that dividend income isn’t the only source of income when it comes to investing in dividend stocks. In fact, if you’re investing in the market, you’re likely looking for income from returns.
However, a dividend stock can add a nice bonus to your portfolio — especially if it’s trading downwards and due to rise and especially if it’s on a monthly basis.
Today, let’s look at one dividend stock I would consider right now. One with a whopping 10.16% dividend yield as of writing.
Allied Properties REIT (TSX:AP.UN) hasn’t had the greatest few years. The real estate investment trust (REIT) focuses on creating offices in urban environments, which, of course, was difficult during the pandemic. Since then, it’s tried to recover, and while it’s not there yet, it should be soon.
That’s because Allied stock focuses on purchasing run-down locations, including warehouses. It then transforms them into modernized urban workspaces across Canada’s major cities. It’s this kind of thinking that’s led the company to its success in the past and should again.
In fact, let’s take a look at earnings to see how the company has been improving.
Getting into earnings
During the last quarter, Allied stock announced an increase across several metrics. This included its funds from operations (FFO) per unit climbing to $0.598 from $0.588 the quarter before. While the FFO per unit was down 1.3% compared to the year before, the same-asset net operating income (NOI) increased 0.9%.
Furthermore, demand for the dividend stock and its spaces is on the rise. There were 306 lease tours in the rental portfolio for the third quarter compared to 292 in the last quarter. That’s despite usually seeing slower leasing activity in the summer months.
Rent and lease rates climbed, with the company achieving higher occupancy rates, lease rates, and occupied square foot rents across the board. So, while it’s not out of the woods yet, there have been signs of major improvement.
What this means
When the market recovers, and believe me, at some point, it will, investors are going to be looking for these kind of companies. Ones that are on a path to success but haven’t quite been discovered by the masses yet.
That’s why now is an excellent time to consider the dividend stock. It holds an insanely high monthly dividend yield of 10.16%. That comes to $1.80 per share annually. And it hasn’t been cut in half like many of the other companies that have struggled. Now that it looks like it’s improving, it looks likely that this will continue to remain stable.
And it’s super cheap. Shares are still down 32% in the last year, with the company trading at just 0.34 times book value. Furthermore, its debt is securely managed, with just 57.55% of equity needed to pay down all its debts.
With all that in mind, Allied stock looks like a great buy to consider today. It provides you with massive monthly passive income that can be used while you wait for the stock to recover. And given the last earnings report, it looks like the dividend stock is well on its way.
Before you consider Allied Properties Real Estate Investment Trust, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023... and Allied Properties Real Estate Investment Trust wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 10/10/23