When it comes to passive income, few assets come close to the comfort and consistency of dividends. They are reliable, relatively safer against market fluctuations, and typically offer higher returns than interests.
One thing that bugs me, and probably other dividend investors as well, is that most companies pay quarterly dividends. So for some months, you might be getting a hefty amount, and for others, almost nothing.
Thankfully, there is an easy solution: Monthly dividend stocks. And if you want to earn a consistent monthly income through dividends, you may find this list of some of the best monthly dividend stocks in Canada very useful.
Table of Contents
13 of The Best Monthly Dividend Stocks in Canada
1. Northland Power Stock
Ticker: NPI
Dividend Yield: 2.84%
Dividend Payout Ratio: 63.5%
Market Cap: $7.58 Billion
Starting the list is Northland Power, with its very modest yield but a very safe payout. And whatever it lacks in the dividend department, it makes up for with capital growth. Even though Northland Power isn’t a dividend aristocrat, its payouts can be considered very safe and dependable, thanks to the nature of its business. It’s a power producer that focuses on clean and green energy and has considerable power generating assets.
The company owns assets of about $11.5 billion, and they are capable of producing 2.68 GW of energy. Energy sources include offshore wind, thermal, onshore wind, and solar, with the first two making up about 80% of the company’s total power generation capacity.
The company has a “balanced” balance sheet, nothing too strong. Most of its facilities are concentrated in North America, with a few offshore wind farms near Europe and Taiwan. Geographic diversification isn’t extensive, but a presence in those markets might allow the company to expand further.
In the last five years, the company has only increased its dividends once.
2. Parkland Fuel Stock
Ticker: PKI
Dividend Yield: 3.3%
Dividend Payout Ratio: 119%
Market Cap: $5.49 Billion
Dividend aristocrats that pay monthly dividends are relatively rare, but not completely unheard of, and Parkland is one of them. The company has been growing its dividends for seven consecutive years. The growth rate isn’t too powerful, but if the company is going through the trouble of only marginally increasing its payouts, the chances are that it wouldn’t slash its dividends.
The payout ratio currently seems dangerously high, but the company had seen worse and has grown its dividends even when the payout ratio grew over 300% in 2017. Parkland has a strong balance sheet, and it’s growing its revenues (year to year growth) at an incredible pace.
Parkland is an independent fuel supplier and marketer. It has a network of retail fuel stations and convenience stores, which is most dense in the country and the US. It’s present in 25 countries, but the bulk of its revenues is generated here.
The company has three principal operating divisions, i.e., retail, logistics, and marketing. This helps because it doesn’t have to rely quite heavily on third-party vendors, and it’s relatively self-sufficient.
3. Granite REIT Stock
Ticker: GRT.UN
Dividend Yield: 3.75%
Dividend Payout Ratio: 46.2%
Market Cap: $4.55 Billion
The first REIT, and spoiler alert, there are a lot of them on this list. A decent portion of REITs pays monthly dividends, making them perfect for investors looking for a predictable dividend income schedule.
Granite is also a dividend aristocrat, the oldest ones in the real estate sector, with nine consecutive years of dividend increases under its belt. It also happens to be one of the best growth stocks in the sector, so that it will be a fine addition to your portfolio in terms of both dividends and the dividends. The yield is also decent enough, and if you buy it at the right time, i.e., during a market crash or a real estate bubble burst, you might be able to lock in a juicy 4% yield or more.
The company has a globally diversified portfolio i.e., its properties are located in nine countries, but the distribution is not very even. Out of its 97 of its income-producing properties, 43 are in the US and 26 in Canada. The rest are in Europe. What makes Granite a very decent investment, apart from its stellar dividend history and capital growth potential, is its asset-class. The company owns and operates logistics properties, which, in this e-commerce-heavy economy, is a prized real estate class.
4. Killam Apartment REIT Stock
Ticker: KMP.UN
Dividend Yield: 3.88%
Dividend Payout Ratio: 28.9%
Market Cap: $1.76 Billion
Killam is another growth-oriented REIT, but it doesn’t grow its dividends. Still, the 3.8% yield, monthly dividends, and a very safe payout ratio make it a good addition to any portfolio. As the name implies, the bulk of Killam’s net operating income (89%) comes from apartment properties. The rest is divided between commercial and manufactured homes.
The total portfolio is worth over $3.5 billion, including 16,701 apartments, 5,875 manufactured homes, and 0.7 million Sq. Ft. of commercial space. The portfolio is geographically concentrated in Halifax, New Brunswick, and Ontario.
The safety of Killam’s monthly dividends comes from its continuously growing rental-based net income. The company focuses on developing and maintaining good-quality properties, and its very high occupancy rate suggests that it’s a good enough landlord.
Even if the dividends don’t grow, the company’s capital growth potential is powerful enough to cover for it. In the last ten years, its dividend-adjusted CAGR (compounded annual growth rate) has been 10.84%.
5. NorthView Canadian High-Yield Residential Fund
Ticker: NHF.UN
Dividend Yield: 4.5%
Dividend Payout Ratio: 56.5%
Market Cap: $2.3 Billion
This monthly dividend paying REIT offers a very juicy yield at a very safe payout ratio. But the stock isn’t a dud in the growth department as well. It’s capital growth potential rivals that of Killam, and it comes with a much higher dividend yield. The REIT has a solid balance sheet, and it has been steadily growing its revenue for the past five years.
Total assets of the company are worth about $4 billion, and it comprises of 27,000 residential units, 344 executive suites, and 1.2 million Sq. Ft. of commercial space. Northview’s portfolio is more evenly distributed among provinces and territories.
As one of the largest multifamily landlord in the country and the largest in several areas, Northview doesn’t face a lot of competition. If the occupancy rate stays above a certain level, its investors don’t need to worry about their monthly dividends disappearing or reducing.
6. TransAlta Renewables Stock
Ticker: RNW
Dividend Yield: 5.27%
Dividend Payout Ratio: 241%
Market Cap: $4.33 Billion
TransAlta Renewables is another energy producer on this list. This one focuses more on hydroelectric power as well as gas, wind farms, and solar power. The company has 44 fully functional facilities in the country and a few in Australia, and long-term contracts. The contracts provide relative security to the company, and surety that someone would be buying the power they are producing.
It has 23 wind farms, one solar power facility, seven natural gas-based power plants, and 13 hydropower facilities. The diversified asset portfolio works in the company’s favor. The pace that it’s growing its wind power generation capabilities, chances are that it might divest off its natural gas before any sanctions.
Despite long-term contracts and sizeable revenue growth in the past five years, the company has been sporting a very high payout ratio for quite a while. One reason might be that the company invests a lot of money in acquiring new facilities and expanding its current facilities.
With a very decent yield and a futuristic approach towards energy production, TransAlta’s future seems safe, and with it, your dividends if you choose to add this company in your portfolio. However, it’s not a very consistent growth stock.
7. First National Financial Stock
Ticker: FN
Dividend Yield: 6%
Dividend Payout Ratio: 74.9%
Market Cap: $2.03 Billion
Though a mortgage company doesn’t seem like a very wise investment, especially if you think that the real estate bubble will burst sometime in the future, but First National is an exception. It’s an eight-year-old aristocrat with a very juicy yield and a reasonable payout ratio despite what the real estate sector went through in 2020.
6% yield enough to get you $50 a month in dividends if you invest $10,000 in the company. And since it’s a dividend aristocrat, that amount will increase every month (albeit at a modest pace). The company also pays special dividends, though not during the lean years.
The company hasn’t grown its market value very steadily in the past, but it does have capital growth potential. Unlike many other companies on this list, First National is quite exposed to market downturns and recession, but it hasn’t stopped it from dishing outs dividends every month, not yet at least.
8. Exchange Income Fund Stock
Ticker: EIF
Dividend Yield: 7.36%
Dividend Payout Ratio: 150%
Market Cap: $1.12 Billion
Exchange Income Fund is a powerful dividend aristocrat, with a history of increasing dividends for nine consecutive years. 2020 has been a rough year for the company because of the industry it’s in, i.e., air travel. Despite having a very diversified portfolio of underlying businesses that includes material companies, manufacturing plants, regional air services, custom helicopters, and a flight college, the company saw its stock go down by over 68% in the 2020 crash.
That also drove the yield up. And even though the payout ratio seems dangerously high, the company has kept growing its dividends through the worst payout ratios. It was never a very decent growth stock, to begin with, and might take a lot of time to recover, but the dividends are likely to continue and grow. The balance sheet is strong, and once the company takes off from the slump it’s trapped in, the payout ratio would come under control as well.
9. Atrium Mortgage Stock
Ticker: AI
Dividend Yield: 8.3%
Dividend Payout Ratio: 94.7%
Market Cap: $473.8 million
Atrium’s ticker is truly a lost opportunity for artificial intelligence (AI) companies. But the company’s monthly payout frequency and a very generous yield of 7.7% makes it a perfect opportunity for dividend investors. Both the stock appreciation and the company’s payout ratio have been very consistent. And even though it increased its market value over the years very slowly, the growth has been very steady.
The 7.7% yield is sizeable enough to give you a monthly amount that rivals the average OAS pension if you invest $100,000 in the company. The company’s assets are almost double its liabilities, and its operating income is growing quite steadily.
It’s a non-banker lender, which allows it to furnish loans/mortgages for properties and projects not covered by traditional lenders and banks. This also allows the company to charge a premium. By focusing on urban area properties, the company ensures that most of its money is tied up to desirable locations and properties.
10. Timbercreek Financial Stock
Ticker: TF
Dividend Yield: 8.48%
Dividend Payout Ratio: 123.2%
Market Cap: $678 million
Timbercreek is another non-bank lender, but it specializes in commercial properties – an industry that’s both highly profitable or a loss-magnet, depending on the asset you are investing in. It offers mortgages to multifamily properties, office, and retail properties, primarily in urban markets across the country. More than half the mortgage loans are tied to multifamily properties.
The balance sheet is in good shape. The yield itself is reason enough to buy into the stock. It’s natural to be apprehensive because of the payout ratio, but understand that it is associated with the fair value evaluation of the underlying properties.
The company doesn’t offer much capital growth, but the stock price usually stays steady. The dividends seem safe enough for now, and many people would have to default on their mortgages for dividends to be in serious danger.
11. Pembina Pipeline Stock
Ticker: PPL
Dividend Yield: 8.62%
Dividend Payout Ratio: 139.7%
Market Cap: $15.76 billion
The energy sector is full of decent dividend stocks, but very few of them offer monthly dividends. Pembina, with its monstrous 8.6% yield, is one of them. It’s one of the largest players in the energy sector and one of the safer ones. Most energy companies are tied up very tightly to oil prices and prospects. But pipeline stocks generate most of their revenues from long-term contracts.
So even if the oil prices are down, the income of companies like Pembina doesn’t suffer as much as exploration and refining related companies. But it’s not completely immune to the market downturn, hence the high payout ratio. But the company has sustained its dividends through worst, and it’s likely to continue.
Plus, it’s an eight-year-old aristocrat, so it will most likely maintain its dividend growth streak and keep increasing its dividends for the foreseeable future.
12. SmartCentres REIT Stock
Ticker: SRU.UN
Dividend Yield: 8.77%
Dividend Payout Ratio: 288%
Market Cap: $3 billion
If you have ever shopped in a Walmart, the chances are that you’ve stepped foot in one of SmartCenters properties. About one-fourth of the Walmarts in the country are on SmartCentres properties. This REIT focuses primarily on retail properties and has about 166 assets throughout the country. The total worth of SmaertCentres assets is $10.4 billion, and it spread around 34.2 million Sq. Ft.
The company has a powerful liquidity position and a robust balance sheet. Despite retail properties suffering some of the worst of what the pandemic had to offer, SmartCentres maintained a very high occupancy rate of 97.8%. The bulk of its tenants are well-known names like Walmart, Loblaws, Shoppers Drugs Mart, etc.
It’s not a very good growth stock, but the yield is reason enough to buy this aristocrat. Its dividend growth rate is also pretty decent. At its current rate, the company will pay off whatever you invest in it, in less than 12 years.
13. RioCan REIT Stock
Ticker: REI.UN
Dividend Yield: 5.06% (Big dividend cut in December 2020)
Dividend Payout Ratio: N/A
Market Cap: $6.12 billion
Closing the list is another REIT that’s offering a yield just shy of double digits. It’s one of the largest REITs in the country and focuses on retail and mixed-use properties in major urban hubs around the country. This Toronto-based REIT has a portfolio of 221 properties, covering an area of 38.6 Sq. Ft. Over 90% of the portfolio comprises of retail properties, and the total asset value is over $15 billion.
The geographical distribution is concentrated mostly in Toronto, where about 52% of the locations are based in. And though retail space suffered quite a bit during the pandemic, the company didn’t suffer as badly as it could, because a major portion of its retail portfolio is anchored by the grocery business.
The yield is high enough that even if you invest just one year’s total TFSA contributions ($6,000) in the company, you will get a decent return every month.
How to Buy Monthly Dividend Stocks in Canada
There are many ways you can invest in monthly dividend stocks in Canada, but I personally use the discount broker Questrade, as they have low fees and are easy to use.
You can open an account at Questrade, and get $50 in free stock trades.
Questrade also allows you to purchase ETFs for free on its platform.
Conclusion
If you create an equally weighted portfolio out of these 13 stocks, you will get an average yield of about 6%. This is enough to start a sizeable passive income (if you can invest a hefty amount) that you can rely on every month.
Thanks to a few dividend aristocrats in the mix, the income increase should hopefully provide you with a nice sum that will hit your investment account every month.
Thanks!