REITs (Real Estate Investment Trusts) and industrial stocks are a smart place to find monthly income. Some of the most interesting monthly dividend stocks are Dream Industrial REIT (TSX:DIR.UN), Choice Properties REIT (TSX:CHP.UN), and Mullen Group (TSX:MTL). Each of these offers returns of 5% or more and they have solid business models.
This TFSA share has a safe yield of 5.8%
Industrial has become a resilient segment of the real estate market thanks to e-commerce, on-shoring and logistics/last mile distribution.
Dream Industrial owns a significant portfolio of multi-tenant warehouses and distribution centers in Canada, the US and Europe. Diversification by tenant and geography helps spread the risk.
The REIT has an occupancy rate of over 95%. The average lease is significantly below market rents, so it will be attractive organic growth of rent increases in the coming years.
Dream’s payout ratio has declined in recent years, making its monthly payout of $0.0583 per unit very sustainable. This TFSA stock currently yields 5.8%.
A recession-proof share with a return of 5.3%
Choice Properties REIT is another great real estate choice for a safe and solid monthly TFSA income. Choice is the largest REIT in Canada with retail, industrial and multi-use properties in its portfolio.
It largely operates essential shopping centers anchored by Loblaws grocery and pharmacy branches. Loblaws is one of Canada’s most successful and profitable grocers, so it’s a great tenant to have.
Choice also has a large portfolio of $4.4 billion of high-quality industrial properties that help balance the portfolio. It has an occupancy rate of 98% and long-term leases (average lease terms of 5.9 years). Current local rents are on average 48% below market price, so this too has a large organic growth factor for tenant turnover or renewal.
Choice pays a monthly benefit of $0.064 per unit. That amounts to a return of 5.3%. Distribution has grown for the past three years in a row, so distribution growth is likely on the horizon.
A monthly TFSA income share that is not a REIT
Then there is Mullen Group. It’s a bit of a change, because it is not a REIT, but still pays monthly dividends. Mullen manages an extensive network of companies in the field of freight transport, logistics and industrial services.
It’s a cash flow machine. It’s not a flashy company, but it’s well run. The company has suffered a severe freight recession that will put pressure on profits through 2025. Still, the shares have done quite well. This year the increase is 5.6%. That’s better than most freight and transport peers, which will be largely in the red by 2025.
Mullen pays a monthly dividend of $0.07 per share. This currently amounts to a return of 5.5%. The dividend is well protected by operating cash flows and income. Mullen has a two-decade history of growing that dividend, making it a quality stock for a TFSA.
The silly bottom line
Put these three stocks together and you get a surprisingly well-rounded monthly income: industrial real estate for stable income, retail with essential services for stability, and logistics for economic exposure that isn’t too cyclical. You get meaningful returns, predictable payments and sector diversification, all within a TFSA where dividends compound tax-free!
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