The two sides of mortgage investment corporations

Good cash flow, but risk is part of the package

I recently received an email from a reader who wanted some advice about Mortgage Investment Corporations (MICs). He wrote: “I have some holdings of both First Capital Investment Corp. and Atrium Mortgage Investment Corp. Both provide high dividend payouts in the 7%-8% range. How safe are these investments?”

Firm Capital Mortgage Investment Corp. (TSX: FC) has been a recommendation of my Income Investor newsletter since January 2004. It’s been in business since 1988.

It’s a small non-bank lender, based in Toronto, that describes itself as “A Boutique Real Estate Capital Bank.” It offers short-term residential and commercial real estate mortgage loans and real estate-related debt investments. As of Sept. 30, the company’s investment portfolio was $627.1 million.

The company pays monthly “dividends” of $0.078 ($0.936 a year), plus year-end top-ups. The top-up for 2025 was $0.084 per share and was paid with the monthly dividend on Jan. 15. The regular monthly payment hasn’t changed since 2007.

The company is conservatively managed and went through the Great Financial Crisis of 2007-09 without a dividend cut.

Atrium Mortgage Investment Corp. (TSX: AI) was founded in 2001 and went public in 2012. It provides commercial and residential loans in major urban centres in Ontario and western Canada. Its mortgage portfolio is comprised of loans ranging from $300,000 to $30 million and secured by real estate in major Canadian urban centres. As of Sept. 30, the portfolio value was $917.3 million, of which 96% were first mortgages.

Like Firm Capital, Atrium makes monthly payments of $0.078 per share. It also pays year-end top-ups that have been as high as $0.29 a share in 2023.

Pros and cons of MICs

MICs are an excellent source of above-average cash flow. At a current price of $11.69, Atrium yields 8%. Firm Capital yields 7.7%, not including the top-up, at a price of $12.19. But there are some facts to consider before you invest.

Safety. Our reader’s specific question was about the safety of these investments. I would rate them as low-medium on the risk scale. Both companies came through the financial crisis unscathed. However, the massive debt build-up we’ve seen in recent years has raised concerns about heightened default risk. These are small companies with modest portfolios compared with the big banks. The fact that their yields are about double those of the banks tells you what the market thinks of their safety. It’s an old investing axiom: The higher the gain, the greater the risk.

Dividends. MICs describe their monthly payments as “dividends.” Sounds good, but the Canada Revenue Agency doesn’t treat them that way. MIC payments are taxed as if they were pure interest. The dividend tax credit does not apply. So, unless you hold the shares in a registered plan, be prepared for a large tax bite.

Share price. If you look back at the history of MIC share prices, you’ll see big swings. For example, you could have bought shares in Firm Capital as low as $7.73 in March 2020, at the start of the pandemic. By June 2021 they were trading over $15 – almost double the price. Those were unusual times, but the price of these stocks generally moves with the interest rate cycle. In 2022, Firm’s price plummeted from around $14 in January to below $11 in late December, during the period when the Bank of Canada was raising rates. That was a great time to take a position – at those low prices, Firm was yielding 8.8%.

The bottom line is that MICs can enhance cash flow, but they should be bought strategically when prices are at the low end of their range. Hold them in a registered plan to escape the punitive taxes.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2026 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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