• Home
  • /
  • Top Stocks
  • /
  • Canada’s Best Monthly Dividend Stocks and REITs in September 2021

Canada’s Best Monthly Dividend Stocks and REITs in September 2021

Posted on September 23, 2021 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.

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 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, 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 39 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.

What Canadian companies pay monthly dividends?

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 3 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)

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 22.37%, Savaria is set to more than double its dividend every four years.

Its most recent increase fell short of this at 7.6%, but we're not too worried. The pandemic impacted the company significantly considering its target market was most at risk, so any raise is a good thing in our eyes.

The company is a Canadian Dividend Aristocrat with a dividend growth streak of 8 years, and has a payout ratio in terms of earnings of 81%.

However, the stock pays out only 48% 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 by double digits in 2021 and beyond, primarily fueled by a huge acquisition of Handicare, making it one of the largest mobility providers in the world.

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)

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 (dual 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 6.64%, 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, way above 100%, but the company's distributable cash flows, which is a common metric used with pipeline companies and their dividends, do cover the dividend at the time of writing.

The oil and gas sector is finally turning things around as the pandemic subsides, and Pembina is starting to recover in price as investors jump back into the sector. 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, 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.

Northland Power (TSX:NPI)

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 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 31% over the last 3 years and revenue has saw growth of over 100% over the last five.

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 if rates are to rise. The Bank of Canada initially did not want to raise rates for the foreseeable future. But, it's clear the economy was not as impacted as many thought, and it may need to raise them sooner than later to "cool" the economy.

Utility companies are cash intensive businesses, often requiring debt to expand infrastructure. So, if rates rise, it could impact Northland Power. However, the company is still in an excellent position to thrive.

In terms of dividend, the stock pays a very respectable 2.92% dividend yield, which works out to be a $0.10 monthly dividend. The company's payout ratio is a very respectable 81% in terms of earnings and its payout ratio in terms of free cash flows is only around 17%.

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.

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 the post below.

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 Questrade, and has compiled a real estate portfolio of his primary residence and 2 rental properties, all before his 30th birthday.