Investing in monthly dividend stocks with an attractive yield enables you to begin a passive-income stream at a low cost. However, as dividends are not guaranteed, it’s crucial to identify companies that can maintain and grow these payouts over time. One TSX stock with a monthly dividend is Bridgemarq Real Estate Services (TSX), which offers shareholders a forward yield of almost 11.6%. Let’s see if this TSX dividend stock should be part of your income portfolio right now.
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An Overview of Bridgemarq Real Estate Services
Valued at $133 million by market cap, Bridgemarq provides a variety of services to residential real estate brokers in Canada. The company offers essential information, tools, and services that assist its customers in delivering real estate sales services. Bridgemarq operates under well-known brand names such as Royal LePage, Via Capitale, and Proprio Direct, with a franchise network of over 20,000 realtors across more than 700 locations.
In recent years, Bridgemarq has diversified its revenue streams by adding brokerage operations, which complement its successful franchise business, allowing for additional growth across the real estate sector. While the stock has returned just 1.3% to shareholders over the last decade, cumulative returns jump to 149% when accounting for dividend reinvestments.
A Strong Performance in Q2 of 2024
In 2024, Bridgemarq made a significant move by acquiring certain real estate brokerages from Brookfield Business Partners for $40.9 million. This acquisition led to a remarkable revenue increase, with $110.1 million reported in Q2 2024, compared to only $12.8 million in the same quarter the previous year. The growth in revenue can be attributed to gross commission income, revenue from acquisitions, improving market conditions, and increased franchise fees.
Bridgemarq generated a net income of $10.6 million (or $0.17 per share) in this quarter, a significant rise from $1.1 million (or $0.12 per share) in the prior year. Its operating cash flow nearly tripled year-over-year to $10.5 million in Q2, while free cash flow totaled $19.3 million over the past year, with a dividend payout of around $12.5 million annually. With a payout ratio of 65%, Bridgemarq is well-positioned to continue targeting acquisitions and strengthening its balance sheet.
How Is the Canadian Real Estate Sector Performing?
The cyclical nature of the real estate sector suggests that Bridgemarq may face challenges during periods of economic contraction or elevated interest rates. While further interest rate cuts are anticipated, the Canadian residential real estate market contracted by 4% year-over-year, totaling $102 billion. Average selling prices dipped by 3%, and unit sales decreased by 2% in the June quarter. However, compared to Q1, average selling prices rose by 1%, and unit sales surged by 40%.
In key markets like Vancouver and Toronto, the real estate sector has shown remarkable growth over the past two decades. The Greater Toronto Area’s market grew by 17% to $23.5 billion in Q2, driven by a 15% decline in unit sales and a 1% drop in selling prices. In contrast, the Greater Vancouver market saw an 11% decline to $10.6 billion in Q2, influenced by a 13% decrease in unit sales, even with a 3% increase in selling prices.
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Investing in Bridgemarq Real Estate Services could provide a lucrative opportunity for investors seeking reliable monthly dividends and the potential for capital appreciation. With its strategic acquisitions and strong cash flow, this stock might be a valuable addition to your income portfolio. Always consider market conditions and perform thorough research before making investment decisions.