These Monthly Dividend Payers Can Carry Your Portfolio for Years

Canadian stocks such as Pembina Pipeline pay monthly dividends to investors allowing them to create a recurring income stream.

| More on:
growing plant shoots on stacked coins

Image source: Getty Images

Monthly dividend stocks are an attractive option for investors as it allows you to generate a predictable stream of passive income. The frequency of these payouts is generally aligned with the timing of utility bill payments, which can be offset by monthly dividend income.

So, monthly dividend stocks are an ideal bet for retirees or for those who aim to generate regular income from their investments. Keeping monthly dividend payments in mind, I have taken a closer look at two monthly high-yield dividend stocks that could carry your portfolio for years.

An integrated midstream energy company

A Canada-based pipeline company, Pembina Pipeline (TSX:PPL)(NYSE:PBA), pays a monthly dividend to investors. Its annual dividend payout stands at $2.52 per share, indicating a monthly dividend of $0.21 per share and a forward yield of 5.2%.

The pipeline operator began paying investors a dividend in 1998, growing it at an annual rate of 5% in the last decade. Due to rising oil prices, shares of Pembina Pipeline have also increased by 24% in the last year, easily outpacing the broader markets.

Pembina’s high dividend yield is sustainable, given that 88% of its income is backed by fee-based contracts. Its dividend payout ratio is less than 60%, and Pembina also has an investment-grade balance sheet, offering it sufficient financial flexibility.

The integrated midstream giant has a robust pipeline of expansion opportunities, which should drive cash flows higher in the future, allowing it to increase dividends as well. Pembina recently created a joint venture to merge its processing assets in Western Canada with those owned by an infrastructure fund. Once the deal is closed, Pembina stated it would increase dividends by 3.6%.

Further, Pembina Pipeline announced it’s building a power generation facility to reduce greenhouse gas emissions and costs at one of its facilities.

An aerospace and aviation stock

A mid-cap company valued at less than $2 billion by market cap, Exchange Income Corp. (TSX:EIF) is engaged in aerospace and aviation services. Exchange Income pays investors a monthly dividend of $0.21 per share, indicating a forward yield of 5.3%. In the last eight years, these payouts have increased by 50%.

Its dividend payout ratio is 58%, which is significantly lower than the ratio of 71% in 2020 and marginally higher than the 57% ratio reported in 2019.

Exchange Income Corp has purposefully navigated a challenging environment since the onset of COVID-19. It remained focused on the long term and was successful in executing growth opportunities as it won new contracts, expanded geographic coverage, and added additional capacity to meet rising demand.

Exchange Income has increased sales from $1 billion in 2017 to $1.4 billion in 2021. Comparatively, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) has grown from $249 million to $330 million in this period.

The company is forecast to increase revenue by 40.7% to $2 billion in 2022 and by 11.6% to $2.22 billion in 2023. Despite a challenging macro-environment, analysts expect its earnings per share to rise to $4.5 in 2023, up from $2.26 in 2021.

We can see Exchange Income stock is valued at a very cheap multiple and trades at 10.5 times 2023 earnings.

Analysts tracking the stock expect it to gain another 30% in the next 12 months. After accounting for its dividend yield, total returns will be closer to 35%.

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.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends PEMBINA PIPELINE CORPORATION.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

These three monthly paying dividend stocks could help you earn over $500 monthly in passive income.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

TFSA Maxed Out? Here Are 5 Other Ways to Grow Your Wealth in Canada

Canadians have other options to grow wealth after maxing out their TFSA contribution limits.

Read more »

A man smiles while playing a video game.
Dividend Stocks

RRSP: 2 High-Yield Dividend Stocks to Consider Now

These top TSX dividend stocks offer attractive yields today for RRSP investors.

Read more »

edit Sale sign, value, discount
Dividend Stocks

2 Bargain Stocks You Can Buy Today and Hold Forever

These two stocks are reliable and trade ultra-cheap, making them among the best TSX stocks to buy now and hold…

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

Top 3 Dividend Stocks Yielding Over 7% to Buy in June 2024

Are you looking for the best of the best dividend stocks? These three are the ones that belong on your…

Read more »

Dividend Stocks

RRSP Investors: Buy These Top Dividend Stocks for Total Returns

RRSP investors can consider adding blue-chip dividend stocks such as Tourmaline Oil to their equity portfolios in 2024.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 8.9 Percent Dividend Stock Pays Cash Every Month

You can forget about risks related to short-term market volatility and buy this high-yield monthly dividend stock to expect solid…

Read more »

Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June

Dividend stocks like Brookfield Asset Management (TSX:BAM) can be great RRSP holdings.

Read more »