Best Monthly Dividend Stocks in Canada for 2021

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by Enoch Omololu

Updated

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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 on a quarterly basis, 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.

Best Monthly Dividend Stocks in Canada

Below, I cover some of the top paying, high-yield monthly dividend stocks you can use to generate cash every month.

1. Pembina Pipeline

  • Symbol: PPL.TO
  • Sector: Energy
  • Dividend Yield: 6.48%
  • Dividend Payout Ratio: 136.73%

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 are generated from long-term contracts. This makes for less volatility in its earnings and cash flows.

You can buy PPL.TO and the other dividend stocks on this list using Wealthsimple Trade. It does not charge trading commissions and you could get a $50 cash bonus when you open a new trading account.

2. TransAlta Renewables Inc.

  • Symbol: RNW.TO
  • Sector: Utilities
  • Dividend Yield: 4.68%
  • Dividend Payout Ratio: 180.76%

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 4.68% and has maintained steady payouts for the last 8 years.

It is likely that RNW’s high dividend payout ratio will decrease in the near future if revenue improves.

3. Northland Power

  • Symbol: NPI.TO
  • Sector: Utilities
  • Dividend Yield: 2.89%
  • Dividend Payout Ratio: 144.58%

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 2.89% 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, with a possibility of increasing Northland Power’s power generation to 4-5 GW over time.

4. Savaria Corporation

  • Symbol: SIS.TO
  • Sector: Industrials
  • Dividend Yield: 2.16%
  • Dividend Payout Ratio: 97.27%

Savaria specializes in manufacturing accessibility products including wheelchair lifts, home elevators, commercial elevators, adapted vehicles, and other patient handling products.

As Canada’s aging population continues to increase, companies like Savaria stand to gain with increasing revenues and, potentially, increased dividends to shareholders.

Savaria’s operations extend beyond Canada, with facilities in Europe, China, and the U.S.

Its most recent dividend declaration was 4 cents per common share for September 2021.

As a Canadian Dividend Aristocrat stock, Savaria also fits well in the monthly dividend stock category.

5. Granite REITS

  • Symbol: GRT-UN.TO
  • Sector: Real Estate
  • Dividend Yield: 3.24%
  • Dividend Payout Ratio: 22.98%

A good proportion of monthly Canadian dividend stocks are Real Estate Investment Trusts (REITs).

These investment vehicles are a great way to diversity your holding in real estate 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. Parkland Corporation

  • Symbol: PKI.TO
  • Sector: Energy
  • Dividend Yield: 3.38%
  • Dividend Payout Ratio: 176.99%

Parkland Corporation’s core business areas include:

  • Supply of petroleum products through its refinery and relationships with various refiners.
  • Retail market of fuel through gas stations including Ultramar, Fas Gas Plus, Esso, and Pioneer.
  • Logistics

Parkland services customers in Canada, the U.S., and the Caribbean.

It pays a monthly dividend and has a current yield of 3.38%.

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7. First National Financial Corporation

  • Symbol: FN.TO
  • Sector: Financial Services
  • Dividend Yield: 5.26%
  • Dividend Payout Ratio: 51.39%

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 $121.5 billion, and so far, revenues have improved, year on year.

8. Shaw Communications

  • Symbol: SJR-B.TO
  • Sector: Communication services
  • Dividend Yield: 3.23%
  • Dividend Payout Ratio: 66.57%

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 3.23%.

9. Superior Plus Corp

  • Symbol: SPB.TO
  • Sector: Utilities
  • Dividend Yield: 4.87%
  • Dividend Payout Ratio: 124.14%

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 4.87% yield and the company’s Debt/Adjusted EBITDA ratio has improved over the last 3 years.

The company’s most recent monthly dividend per common share was 6 cents.

10. AltaGas Ltd.

  • Symbol: ALA.TO
  • Sector: Utilities
  • Dividend Yield: 3.86%
  • Dividend Payout Ratio: 76.21%

AltaGas is an energy infrastructure company with its headquarters in Calgary. Its business involves the gathering, processing, transmission, marketing, and storage of natural gas and natural gas liquids.

It serves more than 1.6 million customers and transacts more than 1.5 Bcf/d of natural gas.

AltaGas Ltd. pays monthly dividends with a current forward annual dividend yield of 3.86%.

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: 6.24%
  • Dividend Payout Ratio: 95.74%

12. RioCan REIT

  • Symbol: REI-UN.TO
  • Sector: Real Estate
  • Dividend Yield: 4.27%
  • Dividend Payout Ratio: 87.59%

13. Freehold Royalties Ltd.

  • Symbol: FRU.TO
  • Sector: Energy
  • Dividend Yield: 6.13%
  • Dividend Payout Ratio: 196.43%

14. SmartCentres REIT

  • Symbol: SRU-UN.TO
  • Sector: Real Estate
  • Dividend Yield: 6.12%
  • Dividend Payout Ratio: 118.32%

15. Exchange Income Corporation

  • Symbol: EIF.TO
  • Sector: Industrials
  • Dividend Yield: 5.19%
  • Dividend Payout Ratio: 153.02%

How To Evaluate Monthly Dividend Stocks

The basic performance indicators you should look at before adding a dividend stock to your portfolio include:

  • 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, 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 $50 cash bonus after trading $150 worth of stocks or ETFs.

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 $25 billion in assets under administration. ETF purchases are free and you pay competitive 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.

If you prefer a trading platform owned by a big bank, CIBC Investors’ Edge is a great option ($6.95/trade).

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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 circumstances or because the company needs to fund expansion. They may even decide to stop paying dividends.

This is why it is important to diversify your investment portfolio across assets.

Best Monthly Dividend Stocks in Canada for 2021

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Author

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. His writing has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, Credit Canada, MSN Money, National Post, CIBC, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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