This 4.9% Monthly Dividend Stock Is a Cash Flow Machine

When thinking about monthly income, it can be hard to find a stock that delivers a steady cheque while offering growth. That’s where H&R Real Estate Investment Trust (TSX:HR.UN) comes in. It built a reputation as a reliable cash flow machine, one that pays monthly dividends. Let’s explore why it could be a smart income pick, but also why it deserves a close look before making the leap.

About H&R

H&R is one of Canada’s largest real estate investment trusts (REIT), with about $10.6 billion in assets as of Dec. 31, 2025. It spans residential, industrial, office and retail properties across North America. Its monthly distribution of $0.05 per unit adds up to $0.60 annually, which currently yields about 4.9% based on its recent share price of about $12.25. That kind of regular income can be appealing, especially for retirees or anyone looking for a cash flow stream.

The firm’s recent first-quarter (Q1) report showed revenue of approximately $217.9 million, a slight 0.9% decline year over year. During the same period, its funds from operations (FFO) per unit came in around $0.30, down a bit from $0.32 in the prior year. Those are minor drops, and the trust remains profitable overall, even though net earnings swung negative due to non‑cash items and valuation shifts. The key cash flow metric of FFO still covers the distributions with a healthy payout ratio of nearly 50% .

It’s easy to get excited about that monthly stream. But it’s important to remember that REITs can be exposed to economic downturns and changes in property markets. H&R’s portfolio is diversified across sectors, which helps spread risk. But vacancies, rent rollbacks or economic softness could weigh on cash flow. That said, the fact that it covers its distributions from operations and keeps payout at half its FFO shows a degree of prudence.

That dividend

Another strength is the monthly payment schedule. Receiving regular income each month provides consistent budgeting power. It also means that investors are less dependent on the timing of distributions. Over a year, you get 12 cheques, making it feel more like a salary alternative than a dividend that arrives quarterly. Right now, a $7,000 investment can bring in $342.60 over a year!

Still, there are trade-offs. In the first quarter, FFO per unit dipped slightly. While analysts expect FFO to rebound, that’s not guaranteed. Market interest rates also play a role. Rising rates can make REIT yields less attractive and debt costs higher. H&R has maintained moderate debt ratios; its debt-to-total assets ratio is around 44%, but it could still face pressure if rates stay elevated or funding costs rise.

H&R’s repositioning strategy merits attention, too. It has been simplifying its structure since spinning off Primaris and focusing more on stabilizing assets. That shift may cut growth upside but adds clarity to the business. The trust is also exploring strategic alternatives, including possible asset sales or partnerships. These moves could unlock value, although there’s no certainty on timing or outcomes.

Considerations

A fair criticism is that H&R isn’t a high-growth stock. Its earnings growth rate has been modest, and revenue has slightly shrunk. For those chasing capital gains, this may not be the REIT to choose. But for income-seekers, that stability is part of the appeal. A 4.9% yield with monthly payment and coverage from FFO is no small feat.

In a balanced portfolio, H&R can play a specific role. It can offer regular income and diversification away from equities. When growth stocks wobble, a monthly dividend cheque offers both comfort and utility. It won’t set the market on fire, but for someone focused on predictable cash flow, it could be just right.

Bottom line

At the end of the day, H&R isn’t a glamorous dividend stock, but it may be the dependable neighbour your portfolio needs. It offers a consistent cash stream, diversified real estate exposure, and a yield that stands out. If you want a monthly dividend income source that’s more machine than gamble, H&R.UN deserves a serious look.

The post This 4.9% Monthly Dividend Stock Is a Cash Flow Machine 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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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