Updated on April 30th, 2025 by Felix Martinez
Real estate investment trusts, or REITS, are often a favorite of investors looking for generous dividend yields, as these companies are required by law to distribute the vast majority of income to shareholders in the form of dividends.
Even better, many REITs distribute dividends on a monthly payment schedule, which enables regular cash flows. This can be a good opportunity for investors who need consistent, monthly payments.
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Slate Grocery REIT (SRRTF) is a Canadian-based real estate investment trust that began paying a monthly dividend in 2014. The stock currently yields 8.5%, which is almost six times the yield of the S&P 500 Index.
This article will evaluate the trust and its dividend to determine if Slate Grocery could be a good candidate for income-oriented investors.
Business Overview
Slate Grocery is an open-ended mutual fund trust headquartered in Toronto and listed on the Toronto stock exchange. U.S. investors can purchase the stock over-the-counter.
Although it is based in Canada, Slate Grocery primarily focuses on purchasing, owning, and leasing a portfolio of real estate properties in the United States.
Source: Investor Presentation
Slate Grocery’s portfolio of 116 properties is anchored almost exclusively by grocery stores. The trust has more than 15 million square feet of properties. As of the most recent quarter, the portfolio was valued at $2.4 billion.
Slate Grocery REIT reported solid Q4 and full-year 2024 results, driven by strong leasing activity and rent growth. CEO Blair Welch emphasized the REIT’s ability to grow NOI through favorable leasing spreads and successful refinancing of $633.5 million in debt, despite tight credit markets.
The REIT posted 4.3% same-property NOI growth and completed 2.7 million square feet of leasing for the year. New leases averaged 28% above prior rents, and portfolio occupancy remained stable at 94.8%. In-place rents remain well below market averages, offering room for future growth.
Q4 rental revenue rose 3%, NOI increased 3.3%, and net income jumped 204%. However, FFO and AFFO declined due to reduced leasing volume. With a strong portfolio and units trading below their net asset value (NAV), the REIT sees continued opportunities for value-driven investors.
Growth Prospects
Slate Grocery counts among its tenants some of the largest grocery stores in the country.
Source: Investor Presentation
Walmart Inc. (WMT), Kroger Corporation (KR), and Walgreens (WBA) are Slate Grocery’s three largest tenants. The first two names account for more than 18% of the total portfolio, which comprises a significant number of properties with just two tenants.
Beyond Walmart and Kroger, however, no tenant accounts for more than 5% of the portfolio, providing Slate Grocery with a good amount of diversification amongst its clients. Only Walmart and Kroger contribute at least 9.0% of annualized base rents.
Additionally, Slate Grocery leases properties to six of the top seven U.S. grocery chains by market share. This means that the trust’s properties are visited by millions of people each week.
Expanding beyond just grocery stores, Slate Grocery has amongst its tenants 20 of the 25 largest consumer good distributors in the world, including Amazon.com Inc. (AMZN), Home Depot (HD), Lowe’s Companies (LOW), and CVS Health Corp. (CVS).
The rise of e-commerce purchasing channels has changed the nature of the retail business. While this has impacted many types of retail companies, grocery stores have weathered these changes better than most.
The resilience of grocery stores can be attributed to their shift to online ordering to drive sales to their businesses. The COVID-19 pandemic accelerated this transition, as grocery stores, along with many other businesses, had to adapt their operations under strict social distancing guidelines.
Slate Grocery’s tenants pivoted quickly to the point where 100% of the portfolio now provides omnichannel distribution, with most fulfilling e-commerce purchases from neighborhood store locations. The trust also has a presence in 23 of the country’s top 50 metropolitan areas.
Inflation has been a headwind in many industries, but the majority of lease agreements have built-in rental escalators, which have helped offset the increased expenses of the trust. Moreover, while many REITs are struggling to cover their interest expense amid nearly 23-year-high interest rates, Slate Grocery has a strong interest coverage ratio.
With top-name tenants, multiple ways for customers to purchase goods, and a strong footprint of properties, Slate Grocery should continue to see solid growth rates moving forward.
Dividend Analysis
That growth should enable Slate Grocery to continue paying its dividend, which currently yields an annualized rate of 8.5%. On the other hand, Slate Grocery has frozen its dividend over the last five years.
While investors seeking dividend growth may be disappointed, it is worth noting that the dividend has not been reduced since the second monthly distribution in 2014. Slate Grocery’s annualized dividend is $0.864.
The REIT currently has a payout ratio of 95%, which is very high for a REIT. Given also the healthy balance sheet of the REIT and its decent growth prospects, the dividend appears to have a meaningful margin of safety in the absence of a severe recession.
Final Thoughts
Monthly dividend-paying stocks can provide more consistent cash flows. Additionally, Slate Grocery offers an exceptionally high yield, which appears safe for the foreseeable future. High-quality tenants also back the trust in some of the largest metropolitan areas in the U.S.
Slate Grocery’s tenants have adapted to the changing retail landscape by embracing e-commerce to drive sales. Investors might find the combination of all these characteristics an attractive investment opportunity.
Additional Reading
Don’t miss the resources below for more monthly dividend stock investing research.
And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.
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