The Best TSX Dividend Stock to Buy in February

Dividend stocks can look simple, but February can punish lazy picks. A high yield can hide a shrinking business, too much debt, or a payout that only works if rates fall fast. The best TSX dividend stocks usually share a few traits: cash flow that shows up quarter after quarter, assets with real resale value, and a payout ratio that leaves room for a bad year. It also helps when management treats the dividend like a reputation, not a marketing line. If you want income you can sleep on, you should focus on durability first, then yield. So let’s look at one dividend stock to consider.

MRD

Melcor Developments (TSX:MRD) doesn’t get the same attention as the big banks or pipelines, but it sits in a familiar Canadian sweet spot. It’s a real estate development and asset management company based in Alberta, building value by taking raw land and turning it into communities and commercial projects, while also holding income-producing properties. It owns and manages a mix of retail, office, industrial, and other real estate, which gives it multiple levers to pull depending on the market. The diversified real estate developer can sell land, lease space, recycle capital, and keep collecting rent while it waits for better conditions.

The biggest story over the last year has been simplification and control. In April 2025, it hit a major milestone by closing the acquisition of the remaining public trust units of Melcor real estate investment trust (REIT), bringing the income-producing properties fully back under its umbrella.

The dividend story also improved, which is the part income investors actually care about. In 2025, it lifted its quarterly dividend to $0.13 per share from $0.11, and it paid a total of $0.48 per share for the year, versus $0.44 in 2024. That’s not a flashy jump, but it signals confidence, and it shows management wants the dividend to move in the right direction again after prior cuts in earlier years. If you’re shopping in February, that upward trend can matter as much as the starting yield.

Earnings support

Now let’s get into earnings, because the comeback case needs numbers behind it. In Q3 2025, Melcor reported revenue of $72.5 million and net income of $14.1 million. Basic earnings came in at $0.46 per share, a sharp improvement from the loss posted in Q3 2024, and it generated funds from operations of $23.4 million in the quarter. Those results also showed how lumpy the business can be, because land sales and project timing can make one quarter look dramatically better than another.

The balance sheet matters just as much for a dividend name, especially one tied to real estate. As of Sept. 30, 2025, total liquidity stood at about $193.1 million, and total general debt sat near $593.9 million, down from roughly $611.3 million at the end of 2024. That direction is what you want to see. It tells you the dividend stock keeps working the debt down while it funds development and supports the dividend. It also reduces the risk of a dividend cut triggered by refinancing pressure.

So what about valuation and what you’re actually paying today? Right now it trades at just 8.5 times earnings, with a forward annual dividend of $0.52, which works out to a yield around 3.2%. That valuation looks modest compared to many TSX “safe dividend” favourites. It also suggests the market still views it as cyclical and uncertain, which can create opportunity if operations stay steady. In fact, here’s what $7,000 could bring today.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTMRD$16.35428$0.52$222.56Quarterly$6,997.80

Foolish takeaway

This stock could be a buy for someone looking for a February dividend pick that isn’t priced like a TSX celebrity. The appeal comes from a reasonable valuation, a dividend that has started to climb again, and a business that owns real assets rather than hype. The risks are clear, too: earnings can swing with land sales, real estate values can wobble, and Alberta-focused exposure can amplify cycles. If you want a steady, boring dividend machine, it may not feel as smooth as a utility. If you can accept some lumpiness in exchange for value and a growing payout, it deserves a spot on your shortlist.

The post The Best TSX Dividend Stock to Buy in February appeared first on The Motley Fool Canada.

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