A 5% Dividend Stock Paying Out Consistent Cash

If you want consistent cash in your pocket, a near-5% dividend can feel like the market’s closest thing to a salary. But it only works when the payout comes from real cash, not wishful thinking, so investors should look past the yield and ask a few boring questions. For instance, does the business generate steady funds, does it keep debt under control, and can it protect its payout when rates and inflation shift? For this dividend stock, the answers are all, “yes.”

CHP

Choice Properties REIT (TSX:CHP.UN) checks the “steady” box as it owns the kind of real estate Canadians use all year, not just when times feel good. It focuses on grocery-anchored retail, plus a growing industrial footprint and some mixed-use and residential assets. In plain terms, it collects rent from locations tied to everyday needs, and that helps smooth out the bumps. It operates at scale, with more than 700 properties and roughly 64 million square feet of space.

That tenant mix matters right now because retail headlines often sound scary, even when essentials keep humming. Choice’s grocery-heavy angle can cushion it when discretionary spending cools. It also benefits when tenants sign longer leases and accept rent steps that climb over time. Its close ties to a major Canadian grocer add another layer of stickiness, even though concentration risk never disappears. Its industrial properties sit in logistics corridors where tenants want space close to major cities.

The unit price has rewarded patient investors lately. Over the year, shares climbed about 19%, with a trading range roughly between $12.51 and $15.82. That move also shows the other side of dividend investing. Even a “boring” real estate investment trust (REIT) can deliver capital gains when sentiment improves, and it can drop fast when rates spike or property values reset.

Earnings support

Now for the numbers that matter. In its third quarter of 2025, Choice reported rental revenue of $362.5 million. It also delivered funds from operations (FFO) of $201.4 million, which worked out to $0.278 per unit on a diluted basis. Those figures matter because FFO tracks the cash-like earnings that support distributions, and it rose year over year on a per-unit basis.

Operating momentum looked healthy, too. Same-asset net operating income on a cash basis came in at $251.5 million for the quarter, up from the prior year, and occupancy sat at 98% at period end. It also achieved leasing spreads on long-term renewals of 9% in retail and 38.3% in industrial, which signals pricing power in the right pockets of the portfolio.

Still, you should not ignore the softer spot. Adjusted funds from operations, or AFFO, landed at $0.192 per unit diluted in Q3, after heavier maintenance spending earlier in the year. That pushed the AFFO payout ratio to about 100% for the quarter. Management said it expects the full-year payout ratio to look more like prior years, but the quarter reminds investors that coverage can tighten when capital work bunches up.

Foolish takeaway

Looking ahead, Choice raised its 2025 outlook for FFO per unit diluted to a range of $1.06 to $1.07, and it targeted about 2% to 3% same-asset NOI growth on a cash basis. On valuation, the units recently traded around $15.50, while management reported net asset value of $14.53 per unit at quarter end, so the market priced it at a modest premium for stability. Right now, here’s what that could bring in from that 5% dividend with a $7,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTCHP.UN$15.34456$0.77$351.12Monthly$6,995.04

So why does CHP.UN fit the “consistent cash” label? It pays a monthly distribution and operates with high occupancy and a necessity-based focus, and it still expects modest growth. Just keep an eye on rates, tenant concentration, and the gap between FFO and AFFO.

The post A 5% Dividend Stock Paying Out Consistent Cash appeared first on The Motley Fool Canada.

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More reading

• 5 Canadian Stocks to Buy and Hold for the Next Five Years
• An Ideal TFSA Stock Paying 5% Each Month
• Earn $200/Month in Passive Income That the CRA Can’t Tax
• How $35,000 Could Be Enough to Build a Reliable Passive Income Portfolio

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.