Guaranteed Investment Certificates (GIC) have been annoyingly good competition for dividend stocks.
When investors can earn a respectable return without watching a share price bounce around, a 4% dividend suddenly has to work harder for attention. That changes as interest rates fall and maturing GICs begin renewing at lower rates.
The Bank of Canada’s policy rate is currently 2.25%, down from 2.75% last summer. If rates eventually move lower again, income investors may start asking an old question with renewed enthusiasm: Where else can I get dependable cash?
Real estate investment trusts (REITs) could be one answer.
Enter REITs
REITs own properties and pass much of the resulting cash flow to investors. Lower rates can help in two ways. Their distributions become more attractive relative to fixed income, while cheaper borrowing can reduce pressure on businesses that use plenty of debt to acquire and develop real estate.
I wouldn’t buy just any REIT before that happens. I’d want strong occupancy, rising rents, manageable leverage, and a distribution covered comfortably by cash flow. That leads me to Granite REIT (TSX: GRT.UN).
GRT
Granite owns 145 logistics, warehouse, and industrial properties across North America and Europe, representing roughly 61.5 million square feet. These are the buildings that keep supply chains moving. Manufacturers need warehouses. Retailers need distribution facilities. Logistics companies need somewhere to sort everything we apparently can’t stop ordering online.
That gives Granite exposure to long-term demand without depending on downtown office workers suddenly rediscovering their commute. Committed occupancy stood at 98.1% in early August. Better still, constant-currency same-property net operating income (NOI) increased 8.3% during the second quarter.
That’s the number I’d watch. NOI is essentially the money properties produce after their direct operating expenses. If existing buildings generate more cash through rent increases and leasing, Granite doesn’t need to buy its way to every dollar of growth.
A strong dividend
Granite stock currently pays $0.30 per unit every month, equivalent to about $3.55 annually. At a recent price around $89.60, that’s a yield of roughly 4%. It has also increased that annualized distribution for 15 consecutive years. Here’s what even $7,000 could bring in.
More importantly, Granite’s second-quarter adjusted funds from operations (AFFO) payout ratio was only 70%. AFFO is a useful REIT cash-flow measure because traditional earnings can be distorted by changing property values. A 70% payout leaves room to reinvest while still sending monthly cash to investors interested in Canadian dividend stocks.
More to come
Granite’s net leverage ratio fell to 32% at the end of June from 35% at the end of 2025. Total debt also declined to $3.2 billion from $3.42 billion. That’s important because lower interest rates aren’t rescuing an overstretched balance sheet here. They could simply make an already solid financing position more favourable.
There are risks, however. A manufacturing slowdown could also weaken industrial-property demand, while rates staying higher for longer could keep borrowing costs and REIT valuations under pressure. The units aren’t sitting in the clearance bin either. They’ve already recovered significantly from their lows. Still, I like buying monthly dividend stocks before falling fixed-income yields make everybody remember why they liked them.
Bottom line
Granite stock offers nearly full occupancy, rising property income, a 4% monthly distribution, and 15 straight years of increases. If rates fall further, income investors may come looking. I’d rather already be collecting the rent when they arrive.
