Canada’s Best Monthly Dividend Stocks and REITs for February 2023

Posted on February 8, 2023 by Dan Kent

If you're looking for monthly dividend stocks here in Canada, you won't need to look farther than this list.

Are monthly dividend stocks a good investment?

There are valid reasons for owning monthly dividend stocks. For one, they make dividend payments on a more frequent basis.

Suppose you're looking for more stable cash flows during retirement. In that case, if you're looking to live solely off the dividend payments and not touch the principle of your investment portfolio, blue-chip Canadian stocks that pay monthly dividends are an excellent option.

Secondly, you make a marginal amount extra with monthly dividend payments.

This is because instead of waiting every quarter for a dividend payment, you get one every month and can re-invest those cash flows into more dividend growth companies, especially with the emergence of fractional shares and commission-free trading.

However, let's be very clear about one thing

We're advocating for monthly dividend stocks, not mutual funds and income funds that pay monthly distributions. Let's use a very popular example, a Canadian banking ETF, BMO Equal Weight Banking Index ETF (TSX:ZEB).

This basic ETF charges a 0.25% management expense ratio and contains 6 stocks, Canada's 6 most prominent banks. All Canadian banks pay quarterly dividends, but the fund pays monthly dividends.

So investors that are just learning how to invest naturally gravitate to the ETF for its monthly dividend. However, it comes at a cost.

Over the long term, shareholders paying that 0.25% expense ratio are going to lose out on returns. That's $25 for every $10,000 invested.

Considering you could buy all 6 stocks through a brokerage like Qtrade for $30 in commission or even for free through Wealthsimple Trade, this is a significant jump.

Monthly dividend stocks aren't very common on the TSX

This may not be all of the monthly dividend payers here in Canada. Still, it's the ones we'd recommend looking at, especially for new investors looking to learn how to buy stocks.

From small-cap to large-cap stocks, if you've got a stock that pays monthly dividends that you'd like to be added to the list, feel free to shoot us an e-mail, and we'll look to add it.

Along with all the monthly dividend payers, we've also decided to include Canadian REITs and Income Trusts. They are another way to earn strong monthly income.

Those looking for monthly dividend income may be interested in investing in a real estate investment trust or income trusts, which provides just that.

What Canadian companies pay monthly dividends?

Canada's monthly dividend paying REITs and Income Trusts

What are the best monthly dividend paying stocks?

  • Savaria (TSE:SIS)
  • Pembina Pipeline (TSE:PPL)
  • Northland Power (TSE:NPI)
  • Whitecap Resources (TSE:WCP)

Savaria (TSX:SIS)

Savaria (TSX:SIS) is expected to post impressive growth numbers in an industry that is still relatively young yet growing extremely fast. Savaria is involved in manufacturing mobility products and modifications, such as stairlifts, elevators, and wheelchair conversion kits for vehicles.

It is a small-cap stock with a market capitalization of under $1B at the time of writing.

The population is getting older here in Canada, and it is estimated that in the next 10 years, Canadians over 65 will increase by 50%. Savaria is a market leader in Canada and is in a great position to benefit from this.

Savaria has a modest dividend yield, but its growth is impressive. With a 5-year annual growth rate of over 17.76%, Savaria is set to double its dividend every 5 years.

However, we expect these dividend rates to slow due to the large-scale acquisition of Handicare, which saw the company undergo a material change in the business.

Because of the debt loads it took, growth will slow until it can integrate Handicare into the fold and get back on firmer financial footing. However, we believe patient, long-term shareholders will be rewarded.

The company is a Canadian Dividend Aristocrat with a dividend growth streak of 10 years. It has a dividend payout ratio in terms of earnings of 200%. However, the stock pays out only 98% of free cash flows, signalling that the dividend is undoubtedly tight, but it should be safe.

Acquisition costs and other one-time issues should be behind them now, and we should see these payout ratios decline.

To go along with excellent growth via its dividend, the company is expected to grow sales and EBITDA by double digits in 2023 and beyond, primarily fueled by the massive acquisition of Handicare, making it not only one of the largest mobility providers in North America but the world.

Savaria combines everything a long-term income investor wants in a dividend-paying stock. A monthly dividend that's growing at a rapid pace, a strong track record of dividend payments, and a company that has a growing but stable cash flow.

Pembina Pipeline (TSX:PPL)

Pembina Pipeline (TSX:PPL) is a midstream and transportation provider of crude oil, condensate, NGLs and natural gas. Over the last 21 years, the company has returned over $6 billion to investors in Canada and the United States (dual-listed) in the form of dividends.

An added bonus, of course, is that the company pays its dividend every month.

The company is a Canadian Dividend Aristocrat and is widely known to be able to finish projects on time and on budget. In fact, over the last decade, Pembina has had 9 major products come in under budget.

Pembina has a high dividend yield, in the mid-5 % range at the time of writing. The company is achieving dividend growth at a modest rate, with 1 and 5-year growth rates in the mid-single digits.

With a stock with Pembina's dividend yield, we can't expect the kind of dividend growth we see in a company like Savaria.

The company's payout ratio is currently high, way above 100%. Still, the company's distributable cash flows, a common metric used with pipeline companies and their dividends, cover the dividend at the time of writing.

The oil and gas sector is finally turning things around as the pandemic subsides. Pembina is starting to recover in price as investors jump back into the industry. There is a clear shift from growth to value, and Pembina could benefit more moving forward.

Not only is Pembina one of the best monthly dividend stocks in the country, but it's also one of the best Canadian dividend stocks and pipelines, period.

Is it the best pipeline stock for dividends? We'd prefer Enbridge (TSX:ENB) in this space. However, Pembina is a strong stock if you want a monthly dividend from a company with an impressive track record of paying it. On a side note, Keyera Corp (TSE:KEY) is another pipeline that pays monthly.

Northland Power (TSX:NPI) is a rare pure-play renewable energy company that pays a monthly dividend.

The company has been in operation for a considerable time when you consider that it is a renewable energy stock, as it was founded in 1987. More and more Canadian investors are catching on to the renewable wave, and stocks like Northland stand to benefit significantly.

It's not like the increase in stock price recently would be considered unwarranted, either. The company has performed exceptionally well over the last half-decade.

In fact, they've grown earnings (CAGR) by over 7% over the last 3 years, and revenue has seen growth of over 10% annually over the same timeframe.

Northland's facilities are primarily located in Eastern Canada, and the farthest it stretches out west is Saskatchewan.

As a utility company, it might face some headwinds as rates continue to rise. However, this isn't unique to Northland Power but to all utility companies.

Utility companies are cash-intensive businesses, often requiring debt to expand infrastructure. So rising rates have no doubt impacted Northland Power. However, the company is still in an excellent position to thrive.

The stock pays a respectable dividend in the mid-3% range, a $0.10 monthly dividend. The company's payout ratio is a very respectable 22% of trailing free cash flow.

The company chose not to raise the dividend last year, so its dividend growth streak remains at 0. However, we have confidence in the renewable energy player's ability to raise it in the future.

Whitecap Resources (TSE:WCP)

Since coming out of lockdowns due to the pandemic, the oil and gas sector has witnessed a massive resurgence in popularity, primarily due to the fact crude oil has surged in price.

Many oil and gas producers, the victims of massive selloffs during the pandemic, survived and began to generate a significant amount of cash flow relative to their valuations.

As a result, many producers, primarily junior-level producers like Whitecap Resources, saw 10-bagger-like returns in just a few years.

Because of its significant cash flow, Whitecap is perfect for those looking for a monthly dividend.

Whitecap Resources Inc is engaged in acquiring, developing, and holding interests in petroleum, natural gas, and natural gas liquids. The company acquires assets with discovered petroleum initially in place and low current recovery factors. Light oil is the primary byproduct of its Western Canada assets. The company uses horizontal drilling and multistage fracturing technology to extract petroleum products from its resources.

The stock currently has a market cap of just over $6.5B, making it a larger, mid-tier producer and one that should be added to a monthly income seekers watchlist today.

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in this post. Stocktrades Ltd will run advertisements on our posts. These advertisements do not represent an endorsement by us.

Dan Kent

About the author

An active dividend and growth investor, Dan has been involved with the website since its inception. He is primarily a researcher and writer here at Stocktrades.ca, and his pieces have numerous mentions on the Globe and Mail, Forbes, Winnipeg Free Press, and other high authority financial websites. He has become an authority figure in the Canadian finance niche, primarily due to his attention to detail and overall dedication to achieving the highest returns on his investments. Investing on his own since he was 19 years old, Dan has compiled the experience and knowledge needed to be successful in the world of self-directed investing, and is always happy to bring that knowledge to Stocktrades.ca readers and any other publications that give him the opportunity to write. He has completed the Canadian Securities Course, manages his TFSA, RRSPs and a LIRA at Qtrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday.