MENU

2 Safe Dividend Stocks to Earn High Monthly Income in 2018

Earning monthly dividend is a great way to supplement your income. But this is not the only reason I love the stocks that pay you dividend every month.

Other appealing factors of investing in such stocks include better compounding if you plan to reinvest your dividends, as well as the backup they provide, that is, being able to pay the bills in case of job loss.

But when choosing a dividend stock, your main consideration should be the safety of your investment and the stability of your income. Here are two monthly dividend stocks that I think meet both of these requirements.

AltaGas

Many investors get confused when they see an extremely attractive dividend yield, which AltaGas Ltd. (TSX:ALA) , a Calgary-based power and gas utility, is offering these days.

With a 7.35% annual dividend yield, AltaGas pays a $0.1825-a-share monthly distribution, which comes to $2.19 a share yearly. The amount of distribution has almost doubled during the past five years, and the company plans to hike it further by 8% each year through 2019.

But the main concern that has been hurting this stock since the beginning of this year is how AltaGas is going to  fund its $8.4 billion deal to buy U.S.-based WGL Holdings, Inc. (NYSE:WGL).

The $8.4 billion deal, which is highly leveraged and requires a lot of financial engineering, is keeping a lot of investors on the sidelines. The company’s shares have slid about 15% this year on these concerns.

However, I think AltaGas is well on track to successfully close this transaction during 2018, so this is a good time to take advantage of its juicy dividend yield. According to the financing plan the company announced a couple of months ago, AltaGas will fund the WGL deal with the proceeds from its $2.6 billion subscription receipts, US$3 billion from a bridge loan, and the rest from the sale of its assets.

First National Financial

First National Financial Corp. (TSX:FN) is my favourite financial stock. First National pays one of the highest monthly dividends with great growth potential.

With more than $100 billion in mortgages under administration, First National is Canada’s largest non-bank originator and underwriter of mortgages.

With a dividend yield of 6.5%, First National stock pays $0.154 a share monthly dividend, which comes to $1.8 on yearly basis.

This payout has grown about 42% during the past five years, and I don’t see any reason why this growth can’t continue in the future, especially when Canada’s housing market remains strong and the central bank is forecast to raise interest rates.

Trading at $28.40, First National shares are entering the new year with strong momentum after recovering from losses suffered in early 2017.

Which stock is better?

I think both stocks are good and safe picks to earn regular monthly income. If I have to pick one, then I will go for First National due to its leading position in the mortgage market. Altagas shares will tread in rough waters during the early part of 2018 as investors wait to see the outcome of its WGL acquisition.

3,985 stocks listed between the TSX & TSXV, but here are the 5 we'd buy right now!

Overwhelmed by how many public companies there are to choose from in Canada? Motley Fool Canada Director of Research Iain Butler has you covered. Once a month, Iain and the rest of our team at Stock Advisor Canada reveal their five favourite Canadian stocks for new money now.

Considering they've walloped a "stuck in the mud" TSX by 10% over the past 4 years with truly life-changing winners like Shopify (up 236%, more than tripling your money), you'll probably want to have your front-row seat reserved when our next five "Best Buys Now" are released - exclusively on behalf of Stock Advisor Canada members.

To make sure your name is on the list, just click here now... before the curtain is lifted without you.

 

Fool contributor Haris Anwar has no position in any stocks mentioned. AltaGas is a recommendation of Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.