Dividends are a tax-efficient source of investment income, and in today’s low-interest-rate environment, the best monthly dividend stocks in Canada beat the returns you would otherwise generate from a savings account.
While the majority of dividend stocks on the TSX pay distributions every quarter, a few of them make monthly payments.
Monthly dividend stocks are attractive as a source of regular income you can look forward to without making an extra effort.
Ideally, the stocks also increase in price over time, resulting in capital gains whenever you choose to sell them.
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Best Monthly Dividend Stocks in Canada
Below, I cover some of the best-paying, high-yield monthly dividend stocks you can use to generate monthly cash.
1. Pembina Pipeline
- Symbol: PPL.TO
- Sector: Energy
- Dividend Yield: 6.06%
- Dividend Payout Ratio: 97.67%
Pembina Pipeline has an attractive dividend yield and pays cash dividends every month.
This company generates income from transporting oil and natural gas across Western Canada, and a huge chunk of its revenues is generated from long-term contracts. This makes for less volatility in its earnings and cash flows.
2. Keyera
- Symbol: KEY.TO
- Sector: Energy
- Dividend Yield: 6.82%
- Dividend Payout Ratio: 86.70%
Keyera Corp is a Calgary-based midstream oil and gas operator that transports oil as well as liquid gases like propane and butane.
The company operates primarily out of the Western Canadian Sedimentary Basin but also has some operations in Oklahoma.
One of Keyera’s major outputs is ethane which is a building block in many different types of plastics, including strong medical-grade plastics and protective equipment.
Keyera is a Canadian dividend aristocrat and has been rewarding shareholders every month since 2019.
3. SmartCentres REIT
- Symbol: SRU-UN.TO
- Sector: Real Estate
- Dividend Yield: 6.98%
- Dividend Payout Ratio: 28.87%
SmartCentres REIT is a real estate investment trust founded in 1989.
It has a portfolio of 174 properties located across Canada, over 34 million sq. ft. of leasable space, and 3,500 acres of land. In all, these assets are valued at $11.7 billion.
With a 97.6% occupancy rate and a significant stake in Project 512, a $15.2 billion intensification program consisting of condos, rental apartments, hotels, etc., this REIT appears to be doing well.
Also, a large chunk of its properties is occupied by major retailers like Walmart.
SmartCentres REIT pays monthly distributions.
4. Northland Power
- Symbol: NPI.TO
- Sector: Utilities
- Dividend Yield: 3.12%
- Dividend Payout Ratio: 49.40%
Northland Power is one of Canada’s largest clean power producers, with a net operating generating capacity of 2.8 GW.
It also owns and operates power-generating assets in Asia, Europe, Latin America, and North America.
The company has a 3.12% dividend yield and pays monthly dividends.
About 95% of its revenues are tied to long-term contracts with “highly creditworthy government counterparties.”
Up to $20 billion in potential capital investments have been identified for the next 5 years, possibly increasing Northland Power’s power generation to 4-5 GW over time.
5. Granite REITs
- Symbol: GRT-UN.TO
- Sector: Real Estate
- Dividend Yield: 4.66%
- Dividend Payout Ratio: 18.16%
A good proportion of monthly Canadian dividend stocks are Real Estate Investment Trusts (REITs).
These investment vehicles are a great way to diversify your real estate holdings without having to deal directly with tenants.
Granite REIT currently has a portfolio of 118 properties in Canada, the United States, The Netherlands, Germany, and other parts of Europe.
This real estate portfolio is equivalent to 51.3 million square feet and has an excellent 99.6% occupancy rate.
Tenants in Granite-owned buildings include Walmart, Wayfair, Magna, Mercedes-Benz, DHL, and Ricoh.
6. First National Financial Corporation
- Symbol: FN.TO
- Sector: Financial Services
- Dividend Yield: 6.58%
- Dividend Payout Ratio: 69.94%
First National is a non-bank mortgage lender that has been around since 1988. It is involved in both residential and commercial real estate.
Since its initial public offering in 2006, the company has paid dividends to shareholders with several increases along the way.
The value of mortgages under administration by First National increased to $127.4 billion, and revenues have been on a steady rise.
7. TransAlta Renewables Inc.
- Symbol: RNW.TO
- Sector: Utilities
- Dividend Yield: 7.16%
- Dividend Payout Ratio: 218.60%
TransAlta Renewables owns and operates several renewable energy generation and transmission facilities in Canada and has economic interests in similar assets in the U.S. and Australia.
These include 24 wind, 13 hydroelectric, 1 solar, and 8 natural gas generation facilities.
Through ownership and investments in “highly contracted renewable and natural gas power generation and other infrastructure assets” and long-term contracts, it can provide a stable cash flow.
It has a forward annual dividend yield of 5.19% and has maintained steady payouts for the last 8 years.
RNW’s high dividend payout ratio will likely decrease in the near future if revenue improves.
8. Timbercreek Financial Corp
- Symbol: TF.TO
- Sector: Financials
- Dividend Yield: 9.06%
- Dividend Payout Ratio: 140.82%
Timbercreek Financial Corp is a Toronto-based non-bank lending company founded in 2016.
This lender issues loans primarily to commercial real estate investors. It prides itself on faster execution and more flexible terms than the major Canadian banks.
It lends primarily against income-producing real estate in markets like Victoria, BC, and Calgary, Alberta.
The stock has paid a consistent dividend of about $0.05 per share since 2016 every month.
9. Shaw Communications
- Symbol: SJR-B.TO
- Sector: Communication services
- Dividend Yield: 3.49%
- Dividend Payout Ratio: 70.12%
Shaw is one of the largest providers of telephone, television, internet, and wireless communication services in Canada.
More than 19 million people live within its mobile wireless network area, and it has spent almost $30 billion on building and upgrading its wireless network infrastructure.
It pays a monthly dividend with a current yield of 3.49%.
10. Superior Plus Corp
- Symbol: SPB.TO
- Sector: Utilities
- Dividend Yield: 6.94%
- Dividend Payout Ratio: 2,215.38%
Superior Plus Corp. distributes propane gas and heating oils across Canada and the United States, where it services over 780,000 customers.
It pays a 6.94% yield, and the company’s Debt/Adjusted EBITDA ratio has improved over the last three years.
Monthly Dividend Paying Stocks
In addition to my top-10 monthly dividend stocks, here are five others worth mentioning:
11. Atrium Mortgage Investment Corporation
- Symbol: AI.TO
- Sector: Financial Services
- Dividend Yield: 8.55%
- Dividend Payout Ratio: 90.00%
12. RioCan REIT
- Symbol: REI-UN.TO
- Sector: Real Estate
- Dividend Yield: 5.41%
- Dividend Payout Ratio: 52.67%
13. Freehold Royalties Ltd.
- Symbol: FRU.TO
- Sector: Energy
- Dividend Yield: 6.73%
- Dividend Payout Ratio: 68.81%
How To Evaluate Monthly Dividend Stocks
The basic performance indicators you should look at before adding a dividend stock to your portfolio include the following:
- Dividend yield
- Dividend payout ratio
- Earnings per share
- Net Debt to EBITDA ratio
- Price to Earnings ratio
- Return on Invested Capital
- Dividend growth rate
You also want to assess the company’s business model and future prospects, the history of dividend payouts and increases, and the total shareholder return.
Here’s an in-depth guide on how to evaluate stocks.
How To Buy Monthly Dividend Stocks in Canada
The best discount brokerages in Canada can be used to invest in the dividend stocks listed above.
My top two choices to save on fees are:
1. Wealthsimple Trade
This online brokerage platform offers commission-free stock and ETF trades. That is, you don’t pay trading commissions when you buy monthly dividend stocks.
New clients who sign up using our exclusive link get a $25 cash bonus after depositing at least $200 within 30 days of registering their account.
Wealthsimple Trade is the only Canadian brokerage offering fractional shares of expensive stocks like Apple and Tesla.
2. Questrade
Questrade is the largest independent brokerage platform in Canada, with more than $30 billion in assets under administration. ETF purchases are free, and you pay competitively low fees when you buy dividend stocks.
New Questrade clients get $50 in free stock trades after depositing at least $1,000 in their accounts.
Best Brokerages in Canada
Wealthsimple
Questrade
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$50 trading fee rebate
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$0 trading commission for stock and ETF trades
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Are Monthly Dividend Stocks Worth It?
These monthly dividend stocks are great for generating monthly passive income if that’s your preference.
As an investor, you should be aware of a few things:
Dividend yields may not always tell a complete story. For example, the dividend yield of a company may increase because its price has dropped significantly. If the lower stock price is due to poor overall business performance, things could trend south quickly.
Companies can lower their dividend payouts at any time due to unforeseen circ*mstances or because they need to fund expansion. They may even decide to stop paying dividends.
This is why it is important to diversify your investment portfolio across assets.
Related: Best Investment Newsletters in Canada.
Editorial Disclaimer: The investing information provided here is for informational purposes only and is not intended as individual investment advice or recommendation to invest in any specific security or investment product. Investors should always conduct their own independent research before making investment decisions or executing investment strategies. Savvy New Canadians does not offer advisory or brokerage services. Note that past investment performance does not guarantee future returns.
As a seasoned financial expert with a deep understanding of investment strategies, particularly in the Canadian market, I have closely followed the dynamics of dividend stocks and their impact on investment portfolios. My expertise is grounded in years of experience, extensive research, and a keen eye for market trends.
Now, let's delve into the concepts presented in the article on the best monthly dividend stocks in Canada:
-
Dividends as a Tax-Efficient Investment:
- Dividends are highlighted as a tax-efficient source of investment income. This is because in many jurisdictions, dividends receive preferential tax treatment compared to other forms of income.
-
Low-Interest-Rate Environment:
- The article mentions that in today’s low-interest-rate environment, monthly dividend stocks in Canada offer returns that surpass those from a savings account. This reflects an awareness of the impact of interest rates on investment returns.
-
Frequency of Dividend Payments:
- While most dividend stocks on the Toronto Stock Exchange (TSX) pay distributions quarterly, the article emphasizes the appeal of monthly dividend stocks due to the regular income they provide without requiring additional effort.
-
Capital Gains Potential:
- The ideal scenario for these monthly dividend stocks is not just regular income but also potential capital gains over time. This underscores the dual benefit of income and potential for capital appreciation.
Now, let's discuss the specific monthly dividend stocks mentioned in the article:
-
Pembina Pipeline (PPL.TO):
- Energy sector.
- Dividend Yield: 6.06%.
- Notable for generating income from transporting oil and natural gas with a significant portion of revenues from long-term contracts, reducing earnings and cash flow volatility.
-
Keyera Corp (KEY.TO):
- Energy sector.
- Dividend Yield: 6.82%.
- Calgary-based midstream oil and gas operator, emphasizing its operations in the Western Canadian Sedimentary Basin and its role in producing key components for plastics.
-
SmartCentres REIT (SRU-UN.TO):
- Real Estate sector.
- Dividend Yield: 6.98%.
- Real estate investment trust with a substantial portfolio, high occupancy rate, and involvement in a significant intensification program (Project 512).
-
Northland Power (NPI.TO):
- Utilities sector.
- Dividend Yield: 3.12%.
- One of Canada’s largest clean power producers, with a focus on long-term contracts for stable revenues and plans for potential capital investments.
-
Granite REIT (GRT-UN.TO):
- Real Estate sector.
- Dividend Yield: 4.66%.
- A real estate investment trust with a diverse portfolio across various countries and high occupancy rate, hosting major retailers.
-
First National Financial Corporation (FN.TO):
- Financial Services sector.
- Dividend Yield: 6.58%.
- Non-bank mortgage lender with consistent dividend payments and a growing portfolio of mortgages.
-
TransAlta Renewables Inc (RNW.TO):
- Utilities sector.
- Dividend Yield: 7.16%.
- Owns and operates renewable energy generation facilities with a focus on stable cash flow through long-term contracts.
-
Timbercreek Financial Corp (TF.TO):
- Financials sector.
- Dividend Yield: 9.06%.
- Non-bank lending company specializing in commercial real estate, known for faster execution and flexibility compared to major Canadian banks.
-
Shaw Communications (SJR-B.TO):
- Communication Services sector.
- Dividend Yield: 3.49%.
- Major provider of telephone, television, internet, and wireless communication services in Canada.
-
Superior Plus Corp (SPB.TO):
- Utilities sector.
- Dividend Yield: 6.94%.
- Distributes propane gas and heating oils across Canada and the United States.
The article also mentions additional monthly dividend stocks worth considering, along with key performance indicators and criteria for evaluating monthly dividend stocks, such as dividend yield, payout ratio, earnings per share, and more. Additionally, it provides insights into the best discount brokerages in Canada for investing in these dividend stocks.
As a well-versed expert, I affirm the importance of thorough research, diversification, and continuous evaluation when making investment decisions, especially in the dynamic landscape of monthly dividend stocks.
