This 7.7% dividend stock pays me every month like clockwork

Can you be assured of money from investments on a fixed date, just as you receive it from a salary? If you invest in trusts, this is possible. Trusts must distribute most of their income to shareholders or be taxed at a higher rate. A trust pays you from the income it generates from the assets it owns. So, real estate investment trusts (REITs) are a popular investment vehicle for those looking for timely monthly payouts.

This 7.7% dividend share is paid out between the 28th and 31st of each month

Before investing in REITs, look at the quality of the assets in the trust and its ability to generate income. Slate Grocery REIT (TSX:SGR.UN) has 116 properties across 23 states in the United States. These properties are valued at $2.4 billion. The majority of these stores are occupied by grocers and have high lease renewals.

The REIT charges an average on-site rent of $12.82 per square foot, which is below the market average of $24,092. This gives room to increase the rent during extensions and new leases, without this having consequences for the occupancy rate. In the third quarterRenewal variances amounted to 15.1% and new leases were 34.8% above the comparable average local rental price, while the occupancy rate remained stable at 94.3%.

These extensions have increased resources from operations and reduced the dividend payout ratio to 78.7%. Debt is 53% of gross book value, which is high. And the weighted average interest rate has risen from 4.4% in the third quarter of the previous year to 5%.

While asset quality and income-generating ability are strong, higher debt levels increase risk. For this risk, the dividend yield is 7.7%.

Despite this, Slate Grocery has regularly paid $0.072 dividends per share between the 28th and 31st of each month. Although the REIT has not been growing its dividends, Canadian investors can benefit from currency fluctuations.

How much can you earn with this 7.7% return?

A $5,000 investment in Slate Grocery can purchase 326 units of the REIT. The REIT pays $0.072 per month. Over a twelve-month period, this equates to $0.864 per share, which is 7.7% of the unit price of $15.31. An investment of €5,000 today could give you a monthly payout of €23.47, which equates to €281.7 per year.

Depending on dollar price fluctuations, Canadian investors will receive a slightly higher amount.

You can use the payout to cover your expenses. If you don’t need that amount, you can invest it in other high-yield stocks to boost your returns, or in growth stocks.

There are some good dividend and growth stocks under $23 worth considering. RioCan REIT is trading at $18.80, and HIVE digital services trades below $4. Your monthly dividend can be used to accumulate these two stocks. Buying even one share a month can grow to 24 shares in two years and 60 shares in five years.

Investing money to build more sources of income makes compounding attractive. Here you are not dependent on just one company, but you diversify across multiple streams that guarantee you a payout in every situation.

Tip for investors

Instead of relying on one stock for a monthly payout, allocate a core dividend stock and some secondary dividend stocks. They will work as your salary and side income. Your initial investment comes from your core dividend.