2 of the Best Canadian Stocks That Pay Out Monthly

These two Canadian dividend stocks are some of the best to buy, offering yields upwards of 5.4% and returning cash to investors each month.

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Many Canadian investors appreciate dividend stocks due to their growth potential as well as the passive income they provide. And while most dividend stocks pay investors quarterly, there are some that return cash every single month.

Dividend stocks that pay out monthly offer several benefits compared to those paying quarterly. First, monthly dividends often provide investors with a steady and predictable income stream. This can be especially appealing to retirees or others looking to earn passive income each month since the consistent cash flow allows for easier budgeting and financial planning.

Additionally, monthly dividends can be reinvested sooner, enhancing the power of compounding and potentially accelerating portfolio growth over time.

If you’re looking for some of the best monthly dividend stocks to buy now, here are two top companies for Canadian investors to consider today.

One of the best Canadian stocks for passive-income seekers

Real estate stocks, especially high-quality real estate investment trusts (REITs), are typically some of the best Canadian stocks that dividend investors can buy due to the fact they are constantly earning tonnes of cash flow from rent and typically pay that cash back to investors on a monthly basis.

That’s why one of the best Canadian dividend stocks to buy for your portfolio is CT REIT (TSX:CRT.UN).

CT REIT is a retail REIT, a subsector that typically isn’t as resilient REITs that own residential properties, for example. However, in CT REIT’s case, since the stock’s majority owner is Canadian Tire, and considering roughly 90% of its rent comes from Canadian Tire stores, it’s certainly one of the best Canadian stocks to buy if you’re looking for monthly income.

During the pandemic, for example, many of CT REIT’s retail peers saw noticeable impacts on their businesses. CT REIT, though, continued to see almost all of its rent thanks in large part to Canadian Tire’s size and its impressive performance through the pandemic.

In fact, CT REIT hasn’t had a single quarter since it began trading, where its revenues haven’t grown year over year.

Plus, in addition to its resiliency, it also has attractive growth potential with a number of projects in its development pipeline.

Therefore, considering the REIT offers investors a yield of more than 5.4% today, monthly dividend payments and impressive dividend-growth potential going forward, it’s one of the best stocks that Canadians can buy now.

A top energy company to buy for dividend investors

Another high-quality stock that dividend investors will want to consider adding to their portfolio is Freehold Royalties (TSX:FRU), an intriguing energy stock.

Freehold earns revenue from other energy companies producing oil and gas on its land. This allows it to earn attractive free cash flow, because it doesn’t need to spend any money on capital expenditures, one of the main reasons why its dividend yield is so high at more than 7.4% today.

However, while it doesn’t need to spend money on capex in the same way an energy producer does, it only aims to return about 60% of its cash flow back to investors to keep its dividend safe, in addition to retaining capital to invest in acquiring more land and expanding its portfolio.

Therefore, Freehold can continue to grow its business over the medium to long run while paying investors significant dividend payments every single month.

Plus, on top of the growth potential it has from acquiring new land, these acquisitions also help to diversify its revenue since much of the land it’s been acquiring lately is south of the border, where economics are often more attractive.

So, if you’re looking for a dividend stock that offers a high yield but one that’s safe as well as stock that can continue to grow its revenue and free cash flow in the coming years, there’s no question that Freehold is one of the best investments Canadians can make today.

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 Daniel Da Costa has positions in Freehold Royalties. The Motley Fool recommends Freehold Royalties. The Motley Fool has a disclosure policy.

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