If you love regular monthly dividend income, there are still some bargain-priced dividend stocks out there today. They may not be obvious, so you will have to do some digging.
However, the combination of value and income is enticing. Here are four relatively unknown monthly dividend stocks that could also have significant upside ahead.
Energy stocks for monthly dividends
Whitecap Resources (TSX:WCP) stock currently earns a really attractive 4.6% dividend yield. Shareholders collect a $0.0367 per unit dividend monthly. That is after a 22% dividend increase just a month ago.
This Canadian oil stock has a solid collection of energy production assets. Last quarter, it earned record free funds flow, of which it returned 50% back to shareholders through its dividend and share buybacks.
The company is a sector ESG (environmental, social, and governance) leader, because it sequesters almost 100% of the carbon its produces. Today, this dividend stock only trades for 3.9 times earnings and 3.7 times free cash flow. After a 28% pullback from June, it looks pretty attractive today.
Tamarack Valley Energy (TSX:TVE) is a smaller energy stock that earns a nice 2.8% dividend yield. It pays a $0.01 dividend monthly. It just increased its dividend by 20% in June. Tamarack Valley operates in some of the most efficient and profitable oil plays in Western Canada.
Like Whitecap, Tamarack is earning a lot of cash today. It is employing that to quickly reduce debt. Once it hits debt targets, it plans to return 75% of free cash flow right back to shareholders.
That means more share buybacks and likely dividend increases. Like Whitecap, it is very cheap and only trades for four times earnings and 4.6 times cash flow right now.
Real estate stocks for monthly income
If you aren’t interested in cyclical energy stocks, real estate stocks are perfect for monthly dividends. Dream Industrial REIT (TSX:DIR.UN) is a favourite because it pays a 5.7% dividend yield and is incredibly cheap at the moment. Right now, this dividend stock pays a well-covered $0.0583 monthly dividend.
At a price of 13 times funds from operation (FFO) (a real estate metric of cash flow), it is one of the cheapest industrial real estate investment trusts (REITs) in North America. This disconnect is completely unjustified.
The REIT has a very low-levered balance sheet (about 30% debt to assets) and a high-quality portfolio. In its recent second quarter, net operating income increased by 10% and funds from operation per unit grew by 12%! This is a great stock for value and income today.
Another real estate stock that is trading with an above-average yield is Canadian Apartment Properties REIT (TSX:CAR.UN). This is Canada’s largest residential REIT. It has a very high-quality portfolio.
This stock has averaged a dividend yield that is around 2.8%. Today, you can pick it up with a 3.2% yield. Investors earn a monthly dividend per unit worth $0.1208. That is up 5% from this time last year.
Normally, CAP REIT trades at a premium to its net asset value. Today, you can get it at 20% discount. It only trades for 18 times FFO, which is a steal compared to its five-year average of 22 times.
