Canadian buyers proceed to hunt out passive revenue by way of at the least one strong dividend inventory. However what makes it strong? Even higher, what would make it defensive?

Right now, we’re going to have a look at a month-to-month passive revenue supplier that gives simply that. It’s a defensive payer that continues to supply strong revenue each single month.

Slate Grocery REIT

Should you’ve been studying the Motley Idiot for some time now, you’ve seemingly come throughout Slate Grocery REIT (TSX:SGR.UN) a number of occasions already. It’s clear why, with an extremely excessive dividend yield at 9.04% as of writing, and buying and selling at simply 6.6 occasions earnings.

However meaning nothing if the inventory can’t maintain it up. Nonetheless, analysts proceed to imagine it should. Throughout its most up-to-date earnings report, analysts said they proceed to see Slate inventory as a “defensive” inventory within the grocery-anchored actual property business.

But even with optimistic outcomes, some analysts apprehensive these earnings got here in decrease than anticipated. So ought to buyers be involved?

The lengthy and the wanting it

In case you’re not acquainted, Slate Grocery REIT is a actual property funding belief (REIT) with 121 grocery-anchored properties throughout 24 states in the US. It makes partnerships with main manufacturers together with Walmart and Kroger.

With these partnerships come stability and defensive portfolios. The common lease settlement for these properties sits within the vary of 5 and 10 years. This may actually assist throughout occasions of bother equivalent to what the remainder of the market goes by way of proper now.

But it additionally supplies diversification in comparison with Canadian corporations in the identical business. Slate Grocery REIT has a number of main partnerships, and extra with smaller corporations. Nonetheless, there may be merely extra competitors in the US offering it with a wider vary of partnerships. In the meantime, right here in Canada there may be far much less competitors available, so that you merely don’t get that diversification.

Remaining helpful

Whereas there was solely barely optimistic outcomes lately, buyers can seemingly make sure that the inventory will recuperate from this diversification in a secure business. In the meantime, they’ll decide up the inventory for top revenue, robust worth and long-term beneficial properties.

Shares at present commerce at 6.6 occasions earnings as talked about, in addition to 1.1 occasions guide worth. This places it nicely inside worth territory. Shares are additionally down 10.5% within the final yr for extra added worth. It’s now again to the place it hovered over the past a number of years after climbing within the final yr or so.

And that right here is the important thing. Traders are shopping for this dividend inventory for passive revenue, not as a progress inventory. Whereas shares are more likely to climb again to pre-fall costs, it is probably not as quick as one would hope. Additional, there may be more likely to be small will increase much like what we’ve seen over the previous few years.

So whereas the inventory is secure, undoubtedly take into account it for its secure dividend not for a sudden increase. Even nonetheless, it’s actually one to think about proper now at such helpful ranges, and with an ultra-high 9% dividend yield.