Macroeconomic uncertainties and recently emerged banking sector turmoil have led to a sharp correction in the TSX Composite benchmark lately. As a result, the main Canadian market index has lost more than 5% of its value since the end of January 2023. Given the possibility of a looming recession, the stock market may remain volatile in the coming months as well.
Such unpredictable market conditions act as a reminder for long-term investors to hold some quality dividend stocks in their portfolio, which can help them earn reliable passive income, irrespective of short-term market jitters.
In this article, I’ll talk about two of the best Canadian dividend stocks that will help you earn monthly passive income in 2023 and beyond.
A top monthly dividend stock to buy now
Soaring prices of energy products and environmental concerns have encouraged countries across the world towards more cost-effective and environment-friendly power-generation systems. This is one of the key reasons why the demand for renewable energy is expected to skyrocket in the coming years.
To benefit from the trend, TransAlta Renewables (TSX: RNW) could be a great Canadian monthly dividend stock to buy now and hold for the long term. The shares of this Calgary-headquartered renewable energy-focused firm currently trade at $11.86 per share with 5.4% year-to-date gains, and it has a market capitalization of $3.2 billion. RNW stock offers an attractive annual dividend yield of 7.9% at this market price and distributes these dividend payouts every month.
TransAlta Renewables has a well-diversified business model. In 2022, the company made more than half of its revenue (about 52%) from the Canadian gas segment, and its Canadian wind segment accounted for another major portion (nearly 41%) of the total revenue. During the year, its revenue rose 19% from a year ago, and its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) improved by 5% year over year, despite inflationary pressures.
The Canadian energy firm is focused on expanding its global operations to benefit from the upcoming surge in renewable energy demand, which should help its financial growth speed up and its stock soar.
And my favourite monthly dividend stock in Canada
Sienna Senior Living (TSX: SIA) is another trustworthy dividend stock in Canada to own for the long term that can continue to pay you every month for years to come. Its stock has lost more than 27% of its value in the last year due to broader market weakness and macroeconomic challenges. The stock currently trades at $10.92 per share with a market cap of $794.2 million. At this market price, Sienna has an annual dividend yield of 8.6%.
The Markham-headquartered company mainly provides various assisted and independent living options to seniors across Canada. Inflationary pressures and labour shortages raised its costs significantly last year, hurting its bottom line. On the positive side, Sienna’s total revenue grew positively by 7% year over year in 2022 to $718.6 million, reflecting strong demand for its services.
While the COVID-19 pandemic has slowed the pace of its business growth in recent years, it’s on track to a healthy financial recovery. I expect this growth trend to improve further in the long run, as the demand for living communities for seniors is expected to soar in the next couple of decades, which should drive its stock higher.
