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2 High-Yield Canadian Dividend Stocks to Buy This Month

Diversification is one thing, but with the strengthened U.S. dollar, it takes CD$1.28 to convert to US$1. So, some Canadians may be looking domestically for income. Here are two dividend stocks for you to consider. Both pay a higher yield than iShares S&P/TSX 60 Index Fund (TSX:XIU), which I’m using as a benchmark for income. The index fund currently yields 2.6%.

Earn 4.3% yield from this top Canadian bank
First, let’s look at a top Canadian bank. Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) provides financial services, and it has paid dividends for over 180 years. It is the third largest bank in Canada, and also has international exposure, with a focus on Mexico, Asia, the Caribbean, and South America.

The Bank of Nova Scotia just increased its dividend this month and now pays out a yield of 4.3%, an income 65% higher than the iShares S&P/TSX 60 Index Fund. Another dividend increase is expected from the bank two quarters from now if the bank continues its pattern of dividend raises. There’s no reason it shouldn’t as it had a payout ratio between 42% and 63% in the past ten years, and it only pays out 46% of its earnings currently.

Earn high monthly income from real estate investment trusts
If you want exposure to the real estate market, you don’t necessarily need to get a mortgage to buy a property. Instead, you can become a part owner in a real estate investment trust (REIT) today, without getting a loan and paying interest. Low interest rates won’t last forever.

Since it’s early on in the year, you might still have contribution room left in your TFSA. The TFSA is an ideal place to buy Canadian REITs with capital gains potential. First, you can take out the monthly income anytime to make a purchase, or you could choose to reinvest it elsewhere. Second, any gains you get are tax-free, no matter when you receive distributions or when you sell for a gain.

I came across a residential REIT that I believe is priced cheaply today. You can buy Northern Property REIT (TSX:NPR.UN) at 22% to 30% discount at its current price of around $24. What’s more to like is that Northern Property pays an annual payout of 6.8% in monthly distributions. The 6.8% yield is 160% higher than the income one would have gotten from iShares S&P/TSX 60 Index Fund.

Want more top dividend stocks?

These three top stocks have delivered dividends for shareholders for decades (and even centuries!). Check out our special FREE report: “3 Dividend Stocks to Buy and Hold Forever”. Click here now to get the full story!

Fool contributor Kay Ng owns shares of Bank of Nova Scotia and Northern Properties.

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