The year 2023 has begun on a bullish note for the Canadian stock market, as stocks across sectors have seen a sharp recovery this year so far. Notably, the TSX Composite benchmark has recovered by 7% after losing more than 8% of its value last year.
While early signs of easing inflationary pressures seem to have driven this recent market-wide rally, continued rate hikes and slowing global economic growth are still keeping fears of a moderate recession intact. Although you can benefit from the ongoing market recovery by buying some growth stocks right now, you must try to minimize your risks by also including some quality monthly dividend stocks in your portfolio that can help you earn reliable passive income, despite economic uncertainties.
Let’s take a closer look at two of the best Canadian monthly dividend stocks you can buy in February 2023.
My first Canadian monthly dividend stock pick in February
When you’re investing in a monthly dividend stock, you should never ignore the underlying fundamentals of the stock. This is because many dividend-paying companies with weak fundamentals have higher chances of this cutting or discontinuing their dividends in difficult economic environments.
Keeping that principle in mind, Allied Properties REIT (TSX:AP.UN) could be a reliable Canadian monthly dividend stock to consider in February 2023, as its underlying fundamentals look strong. This Toronto-headquartered REIT (real estate investment trust) has a market cap of $3.8 billion after its stock has 18.4% year to date to trade at $29.67 per share. At the current market price, Allied offers an attractive annual dividend yield of 6.1% and distributes its dividend payouts every month.
Allied Properties REIT has a large portfolio of the instinct distinctive urban workspaces across major cities in Canada. At the end of 2022, the value of its asset portfolio stood at $11.9 billion, reflecting a 15% growth over the previous year. Its total revenue fell 8.7% YoY (year over year) last year due to a difficult macroeconomic environment. Nonetheless, Street analysts expect its revenue to jump by more than 30% YoY in 2023, possibly due to improving economic conditions and its consistently expanding asset portfolio, which should help its share price appreciate.
My second monthly dividend stock pick in Canada right now
Dream Industrial REIT (TSX:DIR.UN) could be another safe Canadian monthly dividend stock to add to your portfolio in 2023. It currently has a market cap of $3.6 billion as its stock trades at $14.06 per share with about 23.4% year-to-date gains. At this market price, Dream Industrial offers an attractive yearly dividend yield of 5% and distributes its dividends on a monthly basis.
As its name suggests, Dream Industrial REIT manages a large portfolio of industrial properties across Canada, Europe, and the United States, with a gross leasable area of 46.5 million square feet. Unlike Allied Properties, Dream Industrial REIT’s financial growth remained comparatively unaffected by macroeconomic uncertainties in 2022. As a result, its total revenue jumped by 21.7% YoY in the first three quarters of last year, helping its adjusted earnings grow by 15.7% over the same period a year ago.
Despite its positive financial growth trends, Dream Industrial share prices witnessed a sharp 32% correction last year amid the broader market downturn, making it look cheap. While it has already recovered some of those big losses this year so far, it has the potential to soar further, given its consistently improving average occupancy. These factors make it worth considering as a monthly dividend stock in February 2023.
