The stock market in Canada has been turbulent lately, as various macroeconomic challenges and the recently emerged concerns about the financial system have hurt investors’ sentiments. These are some of the key reasons why the TSX Composite Index has lost nearly 11% of its value in the last year. In such a difficult market environment, holding some fundamentally strong dividend stocks in your portfolio could minimize your risks and help you earn consistent returns on your investments from dividends.
In this article, I’ll highlight two of the best Canadian monthly dividend stocks you can buy in March 2023.
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A top Canadian monthly dividend stock from the energy sector
Irrespective of its dividend yield, investors should always carefully analyze a company’s financial growth track record before investing in its stock. If a company has the ability to maintain good financial growth in the long term, its dividends are also likely to witness growth in the future, even if its dividend yield right now doesn’t look very impressive.
With that principle in mind, Freehold Royalties (TSX:FRU) could be a reliable monthly dividend-paying stock in Canada to consider now. This Calgary-headquartered energy sector-focused royalty firm currently has a market cap of $2.1 billion, as its stock trades at $13.62 per share. At this market price, it offers an annual dividend yield of 7.9% and distributes dividends every month.
After rallying by 217% in the previous two years combined, its share prices have seen nearly 13% value erosion in 2023 so far due mainly to a recent sharp decline in the prices of energy products, especially crude oil. Nonetheless, Freehold’s recent financial growth trend remains strong, as its total revenue in 2022 soared 91% YoY (year over year) to $393 million. Despite weaker commodity prices in the last couple of quarters, stronger drilling activity at its lands pushed its production higher, helping it post a solid 160% YoY increase in its adjusted earnings for the year to $1.38 per share.
As its production levels are expected to increase further in the ongoing year, you can expect its financial growth trends to remain strong, making it worth buying on the dip.
And a top monthly dividend REIT
My second monthly dividend stock to consider in March 2023 is Choice Properties REIT (TSX:CHP.UN). The shares of this Toronto-headquartered real estate investment trust (REIT) have slid 3.7% in 2023 so far to $14.22 per share, taking its market capitalization to $4.7 billion. At this market price, the annualized dividend yield of this monthly dividend stock stands at 5.3%.
Choice Properties is one of the largest REITs in Canada, with a strong portfolio of more than 700 high-quality assets, including retail, industrial, and mixed-use residential properties. More importantly, most of its properties are mainly leased to reliable necessity-based tenants, making its financial growth and cash flows largely predictable.
In the five years between 2017 and 2022, Choice Properties REIT’s total revenue rose 52%. And its adjusted net profit during the same five-year period witnessed a solid positive growth of 84%. As the REIT remains focused on advancing its development pipeline and expanding its industrial asset base, you can expect its financial growth to improve further in the long run, which should help this monthly dividend stock soar.
