Best Monthly Dividend Stocks Canada

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Monthly paying dividend stocks have been gaining a lot of traction in Canada of late due to the current economic scenario that we are in. The COVID pandemic has done unprecedented damage to the global economy, which nobody was prepared for. As a result, governments were forced to print money and lower interest rates to all-time lows to stabilize the economy. Unfortunately, these measures have led to record-high levels of inflation. Low-interest rates combined with high inflation mean that traditional savings will almost certainly lead to wealth erosion. In such a scenario, dividend investing is an excellent alternative to conventional savings to generate passive income and create wealth.

Also Check Out: Best Overall Dividend Stocks in Canada

You might be wondering, what companies pay dividends monthly? Investors should look for non-cyclical and preferably non-discretionary businesses as they are most resilient. Such companies have stable cash-flows that allow them to pay out dividends continually. Other qualities that investors should consider are –

  1. High-barriers to Entry: Businesses in sectors such as power, utilities, etc., are usually government regulated are thus protected to some degree from competition.
  2. Dividend Track Record: A company’s dividend track record must be thoroughly examined to ensure that dividends are paid consistently over time. A dividend track record also shows the resilience of the company’s business.
  3. Capital Appreciation and Growth: Dividends are only one component of dividend investing. Investors should examine how the company has created value for stock appreciation and how earnings have grown over time. Companies that have increased dividends over time show sound management and prudent capital allocation.

The Best Monthly Dividend Stocks in Canada

Here, we will be looking at monthly dividend stocks in Canada from different sectors. They give investors a stable passive income stream, gradually grow capital over time, and give them diversification benefits. Dividend investing is measured in terms of dividend yield. Thus, it is precisely like interest rates, where the yield is the rate and the stock price is the principal.

Pembina Pipelines (TSE: PPL) (Sector – Energy Infrastructure)

Pembina is an Energy infrastructure company. The company has a presence in natural gas liquids, natural gas, the crude oil. The company’s largest segment is pipelines, that transport crude oil and natural gas across various regions in North America.

Pembina owns 18000 kilometres of pipelines and owns 19 gas facilities. Pipelines make up 65% of the company’s earnings, followed by facilities (30% of profits), gathering and processing energy commodities.

The pipeline space has high barriers to entry due to government regulation and high capital costs. Pembina’s business model works on long-term lock-in contracts with its clients, giving the company predictable cash-flows and lower exposure to volatility in commodity markets. As a result, the company generates 90+% of earnings from fees agreed upon at contract initiation.

Most importantly, Pembina has a stellar track record of dividend payouts and growth. The company has steadily paid dividends over the past 22 years and has grown them at an average rate of 6.5% per year. As a result, Pembina has a dividend yield of 6.27%. In addition, the stock has returned 5.59% over the past years; however, that was after the adverse effect of COVID on the energy sector. Before COVID, the stock had returned 38.5%.

Exchange Income Corporation (TSE: EIF) (Sector – Industrials)

Exchange Income Corp. is a diversified industrials company. The company has a portfolio of businesses covering the aviation, transport, and manufacturing sectors. Some of the company’s services include private aviation, aviation parts and equipment, emergency medical evacuation services, defence and industrial equipment.

Exchange Income has a very diversified income stream due to the uncorrelated nature of its businesses. However, due to the high CAPEX and complex nature of the aviation and industrial sector, Exchange Income gets recurring income in maintenance and equipment replacement. In addition, exposure to the defence sector lowers the cyclicality of the company’s performance due to consistent demand.

The company has grown by acquisition model. Exchange looks to acquire businesses that integrate well into their existing portfolio by creating synergies, good growth prospects, and good management.

The exchange had a stellar dividend history of the past 11 years when it converted from an Income Trust to a corporation. The dividends have compounded at a rate of 4.7% over the 11 past years. Furthermore, the stock has been an excellent performer with a CAGR of 20% over the last 15 years. Exchange Income has a dividend yield of 5.6%.

Shaw Communications (TSE: SJR.B) (Sector – Communications)

Shaw Communications is a desirable choice in the dividend investing space dominated by power and utility companies because of the importance of communications and the internet to future economic growth. Data consumption will explode over the next decade to the increasing digitization of businesses/services and digital content consumption. Therefore, the internet will most definitely become necessary for everyone in the years to come, making this business non-discretionary.

Shaw is one of Canada’s biggest network companies and a significant player in residential communications services. It owns over 860000 kilometres of fibre broadband that reached 55% of the Canadian population. Shaw provides broadband, WiFi, digital phone, satellite TV, and content services to its 7 million customers. The company generates 78% of its income from fixed-line services and the rest from wireless services.

Shaw Communications has had a stable dividend payout history for the past 20 and has grown dividends at 3.6% annually over that period. However, there are phases when the company does not increase dividends due to the capital-intensive nature of communications network infrastructure. Shaw Communications has returned 38% over the past five years and has a dividend yield of 3.25%.

Parkland Corporation (TSE: PKI) (Sector – Energy)

Parkland Corporation is one of Canada’s biggest fuel retailers, distributors, and marketers. The company operates a portfolio of retail fuel stations with convenience stores and a distribution and storage network for fuel and ancillaries. Parkland is the distribution partner of North America’s most prominent names in Energy like Chevron and Esso.

The company has a presence in Canada, the United States, and the Caribbean. Parkland has three primary target markets – retail, wholesale and commercial. The retail business caters to their chain of fuel stations while wholesale and commercial provide bulk buyers with fuel, propane, lubricant heating oil, etc. The company has a retail fuel stations network that reaches 85% of Canadians.

The company gets 38% of earnings from Canada, 20% from international markets, 6% from the United States, and 36% from the supply.

Parkland has an 18-year history of paying dividends to shareholders. Over this period, the average annual dividend raise has been 1.7%, and dividend growth over the last three years has been 2.4%. As a result, Parkland has returned a solid 72% over the past five years in price appreciation and has a dividend yield of 3.1%.

Extendicare (TSE: EXE) (Sector – Retirement and Health Care)

Extendicare is a Canadian long-term care company that caters to the elder community. The company provides retirement housing services and home health care services. Extendicare operates a network of 120 senior retirement and long-term healthcare facilities run by a team of 23600 employees.

The company has three main segments – long-term care, home health care, and retirement living. It also has two ancillary segments of contract services and consulting. Extendicare has a very stable business model because its services are long-term and are a high-margin business. Stability also comes from government contracts generating 90% of revenue. The company also has excellent growth prospects due to Canada’s rapidly growing 60+ age bracket, which is expected to double by 2040 and make up 25% of the total population by 2060.

The company has a solid dividend payout history of over eight years. The company currently has a dividend yield of 5.71%.

First National Fincorp (TSE: FN) (Sector Finance)

First National is Canada’s largest non-bank lending company. The company’s main business is mortgaging, and it has originated north of 120 billion dollars of mortgages in the past 30 years. So while the pandemic had a short-term negative impact on the finance sector due to asset quality concerns, the long-term is very bright for housing, and in turn, for lending.

The pandemic has created two significant catalysts for the housing and lending market. Firstly, COVID has induced a secular shift from office working towards work-from-home; this will make a house a far more attractive investment than earlier for many people. Secondly, as highlighted above, the current savings rates are lower than inflation, thus creating a significant demand for housing. A home is a stable investment and an appreciating asset in an inflationary environment.

The company has two major segments – residential real estate and commercial real estate. First National has extremely high asset quality, with 90% of mortgages in the prime category. Furthermore, 75% of the company’s mortgages are insured, which mitigates all risk. As a result, the company has a very stable business model as cash-flows are very predictable. First National gets 68% of revenues by repackaging mortgages into securities and selling them to institutional investors; thus, the risk is removed from their books instantly, profits are booked, and capital is freed up for new originations. The remainder of revenues is generated from interest (18%), investments (9%), and mortgage servicing (24%).

The company has a solid dividend payment history of 15 years since its IPO. Over the past five years, dividends have grown at 5% CAGR. Over the same period, EPS has grown at 12% CAGR, and the stock has risen 65%. As a result, First National has a dividend yield of 4.72%.

A&W Royalties Income Fund (TSE: AW.UN) (Sector – Food)

A&W Royalties Income Fund is a pure royalty revenue company. The company does not own or operate any of the A&W trademark restaurants in Canada, the 4th largest fast-food chain in the country.

The company purely collects revenues based on revenue shares. The fund gets royalties from over 1000 restaurants across Canada, generating a combined $1.4 billion in sales in 2020. Franchise owners of A&W restaurants pay the fund 3% of gross income. The fund is a very safe investment as it has the most capital-light model possible. It doesn’t own or operate any restaurants directly; it has no hefty operating costs or debt risk.

Exposure to the food sector is a must for a dividend investor’s portfolio as it is non-cyclical. A&W is even better as it is in the fast-food category, which is very popular among the millennial generation who don’t cook as much older generations and love fast food.

A&W had had an excellent dividend history over the past few years, apart from 2020, when the company chose to halt dividends due to lockdowns causing restaurants to be shut. Dividends resumed in 2021. The company has maintained a steady dividend yield of 4%-6% over the past five years (except 2020). It currently has a dividend yield of 4.26%.

Granite REIT (TSE: GRT.UN) (Sector – Real Estate)

REITs are vehicles created to convert real estate assets into publicly tradable securities. REITs stand for Real Estate Investment Trusts.

REITs own real estate assets of various types such as commercial, industrial and residential. They are also very suitable investments for dividend investors due to the predictability of cash-flows and stable payout of dividends. Proceeds from profits on the sale of real estate and rent from the same are paid to investors as dividends. Given the current economic environment that we are in, REITs are desirable investments. Due to an inflationary environment, the value of real estate owned by the trusts and their rent is bound to grow. Also, the economy is now shaping up to rebound from COVID and enter a new growth phase.

Granite REIT owns a diversified portfolio of 97 properties across nine countries on three continents. The bulk of these properties are in the US (43), followed by Canada (26) and Europe (28). The trust’s properties are mainly in the industrial space, with the rapidly growing logistics space having the most weight. This puts the trust in place to benefit from the growing e-commerce market.

The REIT has a stellar dividend payout history with nine years of consistent payouts and growth. The REIT has a dividend yield of 3.46%. Furthermore, the trust has been a great wealth creator as it has appreciated 113.9% over the past five years.

Learn more about the best REITs in Canada.

Are Canadian Monthly Dividend Stocks a Good Investment?

Currently, the inflation rate in Canada is at a decade high of 3.6%, while interest rates are sub 1%. In such a scenario, investing in resilient businesses that pay dividends and grow capital is a much wiser decision than letting your savings lose value in the bank. Dividend investing is also more tax-efficient as the tax rate on dividends is lower than on interest income.

The pandemic and all the disruptions experienced by people have led to several systemic and secular changes. Like work-from-home has changed the corporate and business world significantly, the pandemic has also brought personal finance to the forefront. Many people have been forced to rethink their finances and have learned the importance of saving the hard way. Dividend-paying stocks are among the most popular options for investors to generate passive income and grow their savings.

How to Buy TSX Monthly Dividend Stocks:

  1. Signup for a brokerage account
  2. Search for monthly dividend-paying companies
  3. Purchase their shares

Dividend-paying equities are stocks of companies that pay part of their income out as cash to their shareholders. Companies choose to pay excess cash to their shareholders if they feel they don’t need it or cannot generate a meaningful return. A company paying a dividend is viewed as a positive sign as shareholders get a passive income. In addition, it signals that the company is generating more returns than it needs for its growth.

Dividend-paying companies have been attractive to investors for an extended period. These stocks are typical in power/utility, steel, cement, FMCG, REITs (Real Estate Investment Trust), and pharmaceuticals. These sectors have stable demand, and companies mature in their life cycles with little capital to fuel growth. In addition, over the past decade, large technology conglomerates such as Apple have also started paying dividends due to high cash flows or excess capital.

Why Monthly Dividend Stocks Canada?

The following sections look at Canada’s best monthly dividend stocks and the best dividend companies globally. Here are three dividend stocks for your portfolio, More than 5 percent, paid for by two cheap dividend shares.

The monthly dividend share calculation allows you to sort by ratio and dividend yield, so you can quickly find undervalued and overvalued dividends – paying shares. Whether you are looking for dividend stocks that increase dividends or use other metrics to value dividends, make sure you diversify your portfolio with the best monthly dividends in Canada and the rest of the world. Buying a dividend share from a company that pays a monthly dividend helps you build a strong dividend portfolio and allows you to identify which stocks have the most significant potential to grow the portfolio over the long term, as well as the highest dividend yields.

Personally, buying one of the Canadian dividend stocks mentioned above and buying shares with lower – the so-called “Canadian dividends”- is a great strategy. However, it is better to buy them as part of a diversified portfolio than focus on one or two. After considering your limited options, pick one of your top three stocks that offer both appreciation and dividend growth.

If you want a more diversified portfolio with more than one or two dividend shares, you can do that.

Our dividend calendar includes the best dividend stocks from over 20 countries worldwide. If you’re looking for dividends – stocks that you can add to your trading or investment portfolio – this article features some of Canada’s highest-yielding dividend stocks for April. And if you look at good, high-yield dividend stocks to add to a Tax-Free Savings Account (TFSA), we’ve covered that and some other good options.

If you look at your dividend portfolio, you will find that you own many Canadian dividend stocks. If you are looking for a way to boost your RRSP or TFSA, some of the Canadian dividend stocks on our list today have a higher dividend yield than what you would get from your local bank’s savings account. Therefore, we have reduced the list to 25 of the best for American investors.

The monthly dividend is rising rapidly, and the payout ratio should allow the stock to maintain its dividend even during economic downturns. Moreover, with two bonus dividends in June and December, this could be the best dividend share in the market.

This monthly dividend is for you, even if you are decades away from retirement. This 1.5% monthly payout ratio means that it has little or no risk of being overtaken by other dividend stocks in the market.

If dividend investing is something you are interested in, you can learn more about a proven investment strategy here by starting with the best monthly dividend shares on the Canadian stock market (TSX). The Canadian dividend growth values we focus on in this article can be used if you want a solid basis for any dividend, including undervalued dividend stocks. In addition, we have three TSX-listed dividend stocks that offer monthly payouts if you look for monthly income from funds or stocks.

In terms of dividends, these shares pay a monthly dividend of 0.10%, equating to approximately $1.05 per month for Immo Income, $0.00 per year for Real Estate Investment Trust (REIT) and $2.00 per week for BMO Financial Group (BNSF). BLV has a long history of paying dividends in shares and is a leading dividend payer. With a company with a long history and a consistent dividend, the stock with the safest monthly dividends on this list has the best dividend growth.

The dividend has averaged 16% annual growth over time and will increase by 18% from 2019. The APU share is on the list of eligible dividend shares due to the increased distributions and the company’s long history with steady dividend growth.

Track your monthly dividends with a Dividend Tracker.

Long-term share price charts, ideally on the upward trend, should have a prime quality underlying business, a long history of dividend growth, and a growing dividend. Dividend investors are looking for dividend shares worth buying and holding for life. Rather than choosing dividend stocks with the highest yield, dividend investors prefer stocks with a lower dividend ratio and have a better chance of increasing dividends over the years if they choose them.


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