Some dividend investors prefer monthly payouts instead of quarterly ones. However, the typical periodic payment of most dividend payers is quarterly. On the TSX, a little over 20 companies have a slight advantage over others because they pay dividends every month.
If you want more frequent investment income, consider Extendicare (TSX: EXE) and Exchange Income (TSX: EIF). Apart from 12 payouts a year, the dividend yields are more than 5.5%. The benefit to you is a faster rate of capital growth, because you can reinvest the dividends more regularly — not just four times a year.
Pure dividend play
Extendicare belongs to the healthcare sector and is a prominent name in the medical care facilities industry. The $776.5 million company offers long-term care (LTC), retirement living, and home healthcare services. As of Q1 2020 (quarter ended March 31, 2021), the Extendicare and Esprit Lifestyle Communities divisions owned and operated 58 LTC homes and 11 retirement communities.
Extendicare Assist had contract services to 51 LTC homes and retirement communities for third parties. The most recent quarterly results were far better than Q1 2020. Revenue increased by 18.6%, while net earnings jumped 40.92%. Despite the positive numbers, the average occupancy at the LTC homes was only 82.9% compared to the high 97.0% in Q1 2020.
Fortunately, Extendicare has basic occupancy protection funding for all LTC homes through August 31, 2021, from the government of Ontario. The company expects occupancy softness again in the winter months. On the stock market, the healthcare stock displays resiliency with its 34.84% year to date. At $8.67 per share, Extendicare pays a higher-than-average 5.54% dividend.
Sturdy industrial stock
Exchange Income (EIC) operates in the aviation and aerospace industry. It has 15 subsidiaries whose businesses range from medevac transportation services and aftermarket aviation parts to communication tower construction. Others engage in high-pressure water cleaning systems and precision metal manufacturing, among others.
The core strength of this $1.51 billion firm from Winnipeg is effective diversification. Management says EIC can withstand economic cycles, because companies that deliver products and services are in various industries, businesses, and regions. The reach is North America and internationally.
Last year was tough, although business perked up in Q1 2021 (the three months ended March 31, 2021). Adjusted net earnings and free cash flow increased by 412.68% and 4.7% versus Q1 2020. The top line slid slightly by 2.03%. One notable highlight during the quarter was that net debt rose by only $4 million.
According to Mike Pyle, EIC’s CEO, the company’s net debt rises by approximately $40 million in the first quarter over the last 10 years. Management’s focus on cash flow management and reduced maintenance capital expenditures was why cash utilization didn’t elevate in Q1 2021.
EIC’s current share price is $39.90, while the dividend yield is 5.65%. Also, the industrial stock is up 12.12% year to date. Moreover, the price is close to its 52-week high of $41.95. Based on analysts’ forecasts, it could climb further to $53. The total return on investment would be dividends plus the capital gain.
Generous monthly payouts
The average dividend yield of Extendicare and Exchange Income is 5.5595%. Assuming you invest $15,000 in each company, the monthly income stream would be $139.88. If you plan to reinvest the dividends and hold the stocks for 15 years, the investment value will compound to $67,884.65.
