With growing concerns about a potential housing bubble in Canada, many investors are searching for ways to safeguard their portfolios in case home prices start to fall. Interest rates remain elevated, inflation is proving persistent, and Canadian household debt is hovering near record highs—creating a potentially volatile backdrop for the housing market. In this environment, one dividend stock worth considering is Timbercreek Financial (TSX:TF), a mortgage lender that could provide both stability and consistent income if real estate values begin to slide.
Also Read: Reliable TSX dividend stocks 2025
What is Timbercreek Financial?
Unlike traditional real estate companies that build, manage, or sell properties, Timbercreek Financial specializes in short-term, structured mortgage lending. The company lends primarily to commercial real estate investors for income-producing assets like apartment complexes and mixed-use buildings. Timbercreek focuses on first-position mortgages with conservative loan-to-value (LTV) ratios, providing a cushion if property prices decline. It earns predictable income from interest payments, which it passes on to shareholders via steady monthly dividends.
The main attraction for investors is Timbercreek’s reliable cash flow. As of now, the stock trades around $7.63 and offers an annual dividend of $0.69, paid monthly—translating to a yield of about 9%, well above the TSX average. For income-seeking investors, particularly those using a Tax-Free Savings Account (TFSA), this yield is hard to overlook. A $10,000 investment could generate approximately $903.90 per year, or $75.32 per month, in passive income. Even if housing prices soften, as long as the properties remain occupied and generate rent, Timbercreek can continue to earn interest and pay dividends.
Also Read: Dividend Paying Stocks Canada
Recent Earnings Performance
In its Q1 2025 earnings report, Timbercreek posted revenue of $28.6 million, up from $27.2 million the previous quarter. Net income came in at $18.1 million ($0.18 per share), slightly beating analyst estimates. The company’s mortgage portfolio totaled $1.13 billion, with an average LTV ratio of 65%, indicating strong downside protection. Additionally, 98% of its loans were performing, a strong signal of resilience amid economic uncertainty.
While it’s true that Timbercreek’s payout ratio sometimes exceeds 100%, that’s typical for mortgage investment corporations (MICs). These businesses are structured to distribute most of their income to shareholders, which often leaves them with minimal retained earnings. What matters most is whether the company’s cash flow can sustain its dividend—and so far, Timbercreek has managed to do just that.
Outlook
A severe decline in home prices could pose challenges. Borrower defaults may rise in a prolonged downturn, putting pressure on earnings. However, Timbercreek is well-positioned to manage such risks thanks to its diversified portfolio, senior secured loan structure, and disciplined lending practices. The company steers clear of speculative borrowers and instead targets established, income-producing assets that are better equipped to handle market volatility.
In short, for investors worried about a real estate correction, Timbercreek Financial offers a compelling mix of income, resilience, and downside protection—making it a dividend stock worth watching.
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