3 TSX Stocks to Buy for Monthly Passive Income

Investors seeking reliable monthly passive income can rely on these TSX dividend stocks and earn attractive monthly passive income.

| More on:
money cash dividends

Image source: Getty Images

Stocks are an attractive avenue to earn regular monthly passive income. Though the uncertain economic outlook poses challenges, the payouts of several high-quality TSX stocks remain immune to the market conditions, implying one can easily rely on them to boost their monthly passive income. So, for investors looking for quality monthly dividend stocks, here are my top three recommendations.

Keyera

Companies operating in the energy sector are famous for their dividend payouts, and Keyera (TSX:KEY) is one among them. It operates an integrated energy infrastructure business and has a solid history of enhancing shareholders’ returns through higher dividend payments. 

For example, Keyera has increased its dividend at a CAGR (compound annual growth rate) of 7% since 2008. Currently, it pays a monthly dividend of $0.16 a share, translating into an attractive yield of 6.6%

Keyera’s higher dividend payouts are driven by its growing DCF (distributable cash flow) per share. It’s worth highlighting that Keyera’s DCF/share grew at a CAGR of 8% since 2008, led by low-risk, fee-for-service energy infrastructure assets. Its assets have high utilization levels and generate ample cash to fund its dividend payouts and growth initiatives. 

For the future, Keyera’s management is confident about growing its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) at a CAGR of 6-7% (through 2025). Its growing adjusted EBITDA will drive DCF growth and dividend payments. Also, its strong balance sheet and low leverage will likely support its growth. 

Keyera’s solid monthly dividend payment history, high yield, EBITDA growth, and a sustainable payout ratio of 50-70% of DCF make it an attractive bet to generate consistent passive income. 

NorthWest Healthcare Properties REIT

While creating a passive-income portfolio, investors should consider adding a few high-quality REITs (real estate investment trusts). They aim to boost unitholders’ returns through their high payout ratios. While investors have multiple investment options, I am bullish on NorthWest Healthcare Properties REIT (TSX:NWH.UN) for its defensive portfolio and high-quality tenant base.

NorthWest Healthcare’s diversified portfolio of healthcare-focused assets and government-supported tenants (approximately 80% of its tenants are with government funding) support its cash flows and payouts. Further, a high occupancy rate (about 97%), a long-weighted average lease term (about 14 years), and inflation-indexed rents (about 82% of rents have protection against inflation) add stability to its payouts. 

Besides its solid fundamentals, NorthWest Healthcare’s focus on the U.S. expansion, solid developmental pipeline, and accretive acquisitions will likely accelerate its growth and support future payouts. Its monthly payouts of $0.067 a share reflect a stellar annual yield of 7.3%, making it an attractive investment for passive-income seekers. 

Pembina Pipeline

Pembina Pipeline (TSX:PPL) is another reliable stock for passive-income investors seeking monthly payouts. It owns an energy infrastructure business supported by highly contracted assets. Thanks to its highly contracted assets, Pembina generates strong fee-based cash flows, which easily cover its payouts.

Pembina has maintained and grown its dividend since 1998. Further, Pembina’s dividend grew at a CAGR of 5%. Also, its payout ratio of 75% of fee-based distributable cash flows is sustainable in the long term. 

Looking ahead, its highly contracted assets, growing fee-based cash flows, and benefits from assets placed into service will enable Pembina to consistently enhance shareholders’ returns. It pays a monthly dividend of $0.217, translating into a dividend yield of 5.7%. 

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends KEYERA CORP, NORTHWEST HEALTHCARE PPTYS REIT UNITS, and PEMBINA PIPELINE CORPORATION. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »