3 Dividend Stocks With +5% Yields Pay Cash Every Month

Monthly income is useful in many ways. That’s why you should keep a watchful eye on these three dividend stocks. One’s a good buy now!

| More on:
Increasing yield

Image source: Getty Images

The Canadian stock market yield about 2.5%. So, getting a yield of north of 5% indicates a doubling of that income. Here are three dividend stocks that pay cash to their common stockholders every month with yields of greater than 5%. Income investors should add them to their watch lists immediately.

Healthcare REIT you can count on for passive income

NorthWest Healthcare Properties REIT (TSX:NWH.UN) is headquartered in Toronto, but it generates long-term contracted and stable rental income from a globally diversified portfolio of healthcare facilities. It has paid a safe monthly cash distribution for more than 10 years.

At the end of 2021, the Canadian REIT had $10 billion of assets and owned 224 properties across Canada, Brazil, Australia, the U.K., and Europe. Because of the stability of its asset class, it maintains a high occupancy rate of about 97% and a weighted average lease expiry of roughly 14 years.

The rental indexation in its international portfolio serves as a hedge for currency volatility. Moreover, management aims to secure its portfolio with local-currency debt whenever possible to minimize foreign exchange risk.

The Canadian REIT currently trades at close to its 2021 net asset value of $14.47 per unit. So, the monthly dividend payer is fairly valued and offers a generous yield of 5.6%. The dividend stock tends to issue equity to fund growth, at which time it may provide buy-the-dip opportunities.

Exchange Income stock

Exchange Income (TSX:EIF) is a very different idea for income. It’s categorized in the airline industry under the industrials sector. Specifically, it focuses on aerospace & aviation services and equipment and manufacturing.

Greg Newman, a senior wealth advisor and portfolio manager at Scotia Wealth Management, just chose Exchange Income as one of his top picks on BNN yesterday. He thinks the name is cheap with a catalyst. He expects a rebound in the areas they’re in (i.e., aviation and manufacturing).

“The dividend stock trades at 11 times 2023 earnings. We model a 23% earnings-per-share growth rate. The balance sheet is okay because of government assistance. You get paid a nice dividend on a comfortable payout ratio in a noisy environment for the capital markets right now. For this name, from a risk-reward standpoint, looks pretty good.”

Greg Newman, senior wealth advisor and portfolio manager at Scotia Wealth Management

At writing, the monthly dividend stock yields 5.4%, and it trades at a discount of roughly 19% from the 12-month consensus price target. It sounds like investors can consider Exchange Income for juicy monthly income and price appreciation over the next few years.

Pembina Pipeline

Pembina Pipeline (TSX:PPL)(NYSE:PBA) is popular for its monthly dividend. At $47.18 per share, it yields 5.3%. Latest comments on Pembina stock from Varun Anand are as follows:

“The dividend yield is sustainable, and it will increase by 3.8% once the KKR deal is done. Pembina has a very strong balance sheet, but the valuation is no longer compelling. Oil and gas stocks go through boom and bust, so a long-term hold will see lots of volatility. It’s good for income, but there are better areas to invest in if you want compounded returns over five years.”

Varun Anand, vice president and senior portfolio manager at Starlight Capital

The analyst consensus 12-month price target of $46.68 per share indicate the monthly dividend stock is fully valued. If you’re strictly looking for passive income, Pembina stock could work. But if you want price appreciation, too, it will be better to buy it in a correction.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS and PEMBINA PIPELINE CORPORATION. Fool contributor Kay Ng has no position in any of the stocks mentioned.

More on Dividend Stocks

Specialty Brands faces higher raw materials costs.
Dividend Stocks

What’s Next for Premium Brands Stock?

Shares of the specialty food production and distribution company have fallen about 25% since last October.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

2 Interesting Buys in Any Market

Here are two intriguing buys in any market climate that offer defensive appeal as well as growth and income earning…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

TFSA Investors: 3 TSX Stocks for Tax-Free Passive Income

These Canadian corporations have strong visibility over future earnings and dividend payouts.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

Lazy Landlords: 3 Cheap Canadian REITs to Buy in May 2022

You can become a passive landlord today by investing in Canadian REITs. Here are three cheap REITs to consider this…

Read more »

Target. Stand out from the crowd
Dividend Stocks

4 High-Yield TSX Stocks to Buy Ahead of Their Ex-Dividend Dates

If you have some cash lying idle, consider these high-yielding TSX stocks.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Passive Income: 3 TSX Stocks With Rapidly Growing Dividends

Worried about inflation? Here are three passive-income stocks to buy that pay rapidly growing dividends.

Read more »

Family relationship with bond and care
Dividend Stocks

Retirees: 4 Safe Stocks to Buy for Decent Passive Income

Retirees can offset the impact of runaway inflation by buying safe dividend stocks to create more cash flows.

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

3 Canadian Energy Stocks to Buy for Reliable Passive Income

Canadian energy stocks are gushing cash. Here's three top stocks that are perfect buys for reliable passive income.

Read more »