11.5% Yield! I’m Buying This Dividend Stock and Holding for Decades
In a market where many investors are chasing the next big tech stock, there’s something comforting about a steady, reliable dividend payer. Allied Properties Real Estate Investment Trust (TSX:AP.UN) fits that bill, offering a substantial yield and a focus on Canada’s urban workspaces. So let’s dig into this analyst-loving dividend stock.
About Allied
Allied specializes in owning and operating distinctive urban office properties in major Canadian cities like Toronto, Montreal, and Vancouver. Its portfolio includes a mix of heritage and modern buildings, catering to knowledge-based organizations seeking creative and collaborative environments. This niche focus has allowed Allied to carve out a unique position in the Canadian real estate landscape.
As of the end of the first quarter of 2025, Allied’s portfolio comprised 171 income-producing properties, encompassing approximately 15.8 million square feet of gross leasable area. The REIT reported a leased area of 86.9% and an occupied area of 85.9%, reflecting stable demand for its urban workspace offerings. The average in-place net rent per occupied square foot stood at $25.30, up 5% from the same period in the previous year.
Into earnings
Financially, Allied reported rental revenue of $150.6 million for Q1 2025, a 4.9% increase compared to Q1 2024. However, the dividend stock also recorded a net loss and comprehensive loss of $107.7 million for the quarter, primarily due to a fair value loss on investment properties and investment properties held for sale amounting to $164.1 million.
Despite the net loss, Allied’s funds from operations (FFO) for the quarter were $71.1 million, translating to $0.509 per unit on a diluted basis. Adjusted funds from operations (AFFO) stood at $64.8 million, or $0.464 per unit. The AFFO payout ratio was 97%, indicating that the REIT is distributing nearly all of its adjusted funds from operations to unit holders.
On the rebound
Allied has been proactive in managing its portfolio and balance sheet. In 2024, the REIT acquired three triple-A urban properties: 400 West Georgia in Vancouver, 19 Duncan in Toronto, and Calgary House in Calgary. To fund these acquisitions and maintain a healthy balance sheet, Allied sold seven non-core properties for $229 million in 2024 and plans to sell additional non-core properties for at least $300 million in 2025.
The REIT also completed $850 million in replacement debt financing in Q1 2025, including a $450 million green bond offering and a $400 million dual-tranche offering of debentures. These financings were used to refinance all debt maturing in 2025, except for construction financing on a Vancouver property. As a result, Allied’s total debt ratio stood at 42.9%, and net debt as a multiple of annualized adjusted EBITDA was 11.6 times at the end of Q1 2025.
Bottom line
Looking ahead, Allied aims to increase its occupied and leased area to at least 90% by the end of 2025. The REIT also expects to achieve growth in same asset net operating income (NOI) of approximately 2% for the year. However, management anticipates a contraction in FFO and AFFO per unit by approximately 4% in 2025, primarily due to higher overall interest costs stemming from the 2024 acquisitions.
Yet even during this period, investors can still look forward to a whopping 11.5% dividend yield. In fact, here is what a $10,000 investment would look like on the TSX today.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| AP.UN | $15.50 | 645 | $1.80 | $1,161.00 | Monthly | $9,997.50 |
That adds up to $96.75 dished out monthly! Therefore, Allied Properties REIT offers a compelling investment opportunity for those looking to add a high-yielding, urban-focused real estate asset to their portfolio. With a current yield of approximately 11.5% and a strategic focus on Canada’s major cities, Allied presents a blend of income and growth potential that could appeal to long-term investors.
