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October 27, 2020

Canada’s Best Monthly Dividend Stocks and REITs

By Dan Kent

October 27, 2020

**Updated for October 2020! Tons of new stocks added**

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

If you're looking for more stable cash flows during retirement, especially 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 dividends on a monthly basis are an excellent option.

Secondly, you do make a very 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.

However, lets be clear about one thing.

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

This very basic ETF charges a 0.55% management expense ratio and contains a total of 6 stocks, Canada's 6 biggest banks. All Canadian banks pay quarterly dividends, but the fund is paying out a monthly dividend.

So investors naturally gravitate to the ETF for its monthly dividend. However it comes at a cost. Over the long term, paying that 0.55% expense ratio is going to eat into your returns. That's $55 for every $10,000 invested. Considering you could buy all 6 stocks through a brokerage like Questrade for $30 in commission, this is a significant jump.

Secondly, you sacrifice dividend yield. Sure, you get a monthly dividend through the ETF, however buying all 6 banking stocks individually will give you a higher yield, albeit on a quarterly basis.

Canadian stocks that pay monthly dividends are quite rare

Monthly dividend stocks aren't very common on the TSX. In fact, there are only 22 stocks on this list. This may not be all of the monthly dividend payers here in Canada, but 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 comment below and we will take a look.

Along with all the monthly dividend payers, we've decided to include Canadian REITs and Income Trusts as well.

We figured those looking for monthly dividend income may be interested in investing in REIT's or income trusts, which provide just that.

**Note: All yields are trailing dividend yields. Mathieu, Dylan or myself may hold positions in companies listed below.

Canadian monthly dividend stocks that have completely cut or suspended the dividend in 2020:

Keep in mind, stocks that have cut their dividend but still continue to pay one (ei a 50% cut) are not included here. They are still listed in the tables below. However, the companies below have completely suspended or cut the dividend in 2020. If we've missed a company, drop it in the comments. Although these stocks have cut their dividend, some of them are still quality companies.

  • AW.UN
  • BPF.UN
  • CHR.TO
  • MTL.TO
  • CHW.TO
  • CGX.TO
  • HOT.UN

Complete list of Canada's monthly dividend paying stocks

Canada's monthly dividend paying REITs and Income Trusts

What are the best monthly dividend paying stocks?

With limited options, it's tough to make a long list of the best monthly dividend payers. However, there are still some stocks on here that provide both excellent growth via stock appreciation and dividends. Lets go over 4 of the best monthly dividend stocks here in Canada, stocks that we see Canadian investors relying on for consistent, long term income generation.

Savaria (TSX:SIS)

Monthly dividend paying stocks in Canada - Savaria

 

Savaria (TSX:SIS) is expected to post impressive growth numbers in an industry that is still relatively young, yet growing extremely fast.

Savaria provides mobility products and modifications, such as stairlifts and wheelchair conversion kits for vehicles.

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

Savaria has a modest dividend yield, but the impressive part is its growth. With a 5 year annual growth rate of over 25%, Savaria is set to double its dividend every four years.

Its most recent increase fell short of this at 16.67%, but we're not too worried. The company is a Canadian Dividend Aristocrat with a dividend growth streak of 7 years, and has a payout ratio in terms of earnings of 79%. However, the stock pays out only 43% of free cash flows, signaling that the dividend is fairly safe.

To go along with excellent growth via its dividend, the company was expected to growth both sales and EBITDA in 2020 by 40%. COVID-19 has resulted in the company pulling its guidance like most others, but we're confident it can rebound once the economy does.

Savaria combines everything a long term income investor wants. A monthly dividend that's growing at a rapid pace, a strong track record of dividend payments, and a payout ratio that should enable the stock to maintain its dividend during this economic downturn.

Pembina Pipeline (TSX:PPL)

Best Canadian stocks that pay monthly dividends - Pembina

 

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

An added bonus of course, is that the company pays its dividend on a monthly basis.

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 6 years Pembina has had 13 major projects, 9 of which came in under budget.

Pembina has a high dividend yield, coming in at 8.87%, and 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 that has the dividend yield of Pembina, we can't expect the kind of dividend growth we see in a company like Savaria. The company's payout ratio is currently high at 96% in terms of earnings, and we will have to keep a very close eye on Pembina moving forward.

With the oil and gas bear market we're currently seeing, Pembina is seeing depressed price levels that are creating an even better opportunity. Not only is Pembina one of the best monthly dividend stocks in the country, it's one of the best Canadian dividend stocks period.

Is it the best pipeline stock for dividends? Probably not, we'd prefer Enbridge (TSX:ENB) in this space. However, if you want a monthly dividend from a company with an impressive track record of paying it, Pembina is a strong stock.

Exchange Income Fund (TSX:EIF)

Monthly dividend paying stocks in Canada - Exchange Income Corp

 

Exchange Income Corp (TSX:EIF) provides services to companies in the aerospace industry, such as emergency medivac services. The company has a strong growth-via-acquisition model, making 11 major acquisitions over the last 10 years.

The major benefit to owning a stock like Exchange Income Fund is the fact the majority of its revenue comes from government related contracts.

Revenue is reliable and consistent, unless government policy changes or budgets are cut. As an investor, this makes income more reliable, and it's the kind of stock you look to stash inside your portfolio and forget about, all while collecting an excellent dividend.

Exchange Income Fund pays an excellent dividend yield, north of 9% and has raised dividends for over 8 years, making it an Aristocrat itself.

Dividend growth rates are the lowest out of these five stocks, with 1 and 5 year dividend growth rates coming in at the mid to low single digit level. But again, with a yield as high as it has, that is to be expected.

Overall, Exchange Income Corp is an excellent Canadian dividend stock that just so happens to pay on a monthly basis. If you're looking for monthly dividend stocks in Canada, this is one of the best.

Northland Power (TSX:NPI)

Northland Power Logo Northland Power (TSX:NPI) is one of the rare pure-play renewable energy companies that pays a monthly dividend.

The company has been in operation for a considerable amount of time when you consider the fact 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 would be unwarranted either. The company has performed exceptionally well over the last half decade. In fact, they've grown earnings (CAGR) by over 31% over the last 3 years and revenue has saw growth of over 100% over the last five.

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

As a utility company, it should be able to benefit substantially from the rapid drop in interest rates due to the economic downfall of COVID-19, and this could lead to higher growth. The company will be able to expand infrastructure for dirt cheap costs.

In terms of dividend, the stock pays a very respectable 3.50% dividend yield, which works out to be a $0.10 monthly dividend. The company's payout ratio is a very respectable 62% in terms of earnings and its payout ratio in terms of free cash flows is around the same.

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

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Dan Kent


An active dividend and growth investor, Dan has been involved with the website since its inception. Dan 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. Dan manages his TFSA, RRSPs and a LIRA at Questrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday.

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