With a 4.6% Dividend Yield, Is it Time to Buy Granite Stock?

When it comes to growth, many investors tend to focus on the dividend yield alone. And granted, that’s what I’ve put in this title. However, what investors should instead focus on is how you can create passive income. That passive income includes dividends, sure. But it also includes returns.

Therefore, when we look at Granite REIT (TSX:GRT.UN), you can certainly be happy that it has a higher dividend yield. But don’t forget about returns as well. So that’s why today we’re going to look at why there is more growth coming for Granite stock, and why now is the time to bring in that dividend while you can.

Earnings growth

Industrial companies remain strong, with the need for warehouses, assembly lines and storage space continuing to be driven by demand. This is why Granite stock saw yet another strong quarter during its latest results. The company not only continues to grow operations, but also bring in cash from smart business moves. This included the sale of its property in Concord, Ontario for $20.6 million.

Looking at financials, Granite stock saw net income rise significantly to $109.2 million from $94 million the year before. Funds from operations also rose to $79.1 million from $70.7 million in 2022. That’s despite seeing foreign exchange rates making an impact on the bottom line.

Granite did recognize net fair value losses of $53.2 million in the third quarter, due to expansion in discount and terminal capitalization rates. This again was impacted by foreign markets. However, the value should increase once the dollar in these areas rises again.

Analysts on board

Analysts were quite bullish not just about Granite stock, but the industrial sector in general. Especially going into the holiday season when these companies are in high demand and come into the spotlight once more.

Granite stock now has an outperform rating across the board. The company fell in line with expected results, yet due to occupancy slippage in the United States investors were scared off. However, this could turn out to be an attractive choice for investors.

With a solid leasing pipeline, new construction startups and more long-term lease agreements, Granite stock looks like an attractive option based on analyst recommendations as well.

Valuable today

Granite stock has a solid future ahead, but according to these analysts looks to be valuable right now. The REIT is down 11% in the last year as of writing, trading at just 0.82 times book value as of writing. And with a dividend yield at 4.6%, this is far higher than the five-year average of 3.98%.

Furthermore, the dividend stock may have some lower results in the last quarter. However, overall it remains a strong stock that is financially stable. It would take just 57.9% of its equity to pay off all its debts at the time of writing. Therefore, you don’t have to worry about a dividend cut, and indeed the company looks like it will continue to increase that dividend.

So, if you want growth from the industrial sector, and high dividend income, get it while you can with Granite stock.

The post With a 4.6% Dividend Yield, Is it Time to Buy Granite Stock? appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Granite Real Estate Investment Trust?

Before you consider Granite Real Estate Investment Trust, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in November 2023… and Granite Real Estate Investment Trust wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 24 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 11/14/23

More reading

  • 4 Amazing Canadian REITs to Secure Your Future
  • Navigating the World of REITs: Dividend Gems in the Canadian Real Estate Sector
  • Investors: Here’s How to Make $1,000 Each Month in Retirement

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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