3 Best Canadian Stocks to Buy for Monthly Passive Income

Explore these three top Canadian stocks for monthly passive income and enjoy a steady stream of earnings without lifting a finger.

| More on:
Dollar symbol and Canadian flag on keyboard

Image source: Getty Images

A low-cost but effective way to generate monthly passive income is by investing in quality dividend stocks. Its imperative to identify companies that are fundamentally strong and recession-resistant, allowing them to maintain dividend payouts across economic cycles.

Here are the three best Canadian stocks that you can consider buying for monthly passive income.

Slate Grocery REIT

A real estate investment trust (REIT) that operates in the grocery segment, Slate Grocery REIT (TSX:SGR.UN) has a portfolio of 117 properties located in the United States. With an asset value of $2.4 billion, these properties span 15.3 million square feet.

Last June, Slate Grocery disclosed plans to acquire 14 properties in the southeastern United States for US$425 million, increasing the company’s exposure to high-growth regions such as Florida and North Carolina.

A widening portfolio of properties allows Slate Retail to pay investors a monthly dividend of $0.0975 per share, indicating a tasty dividend yield of 8.7%. Its tenants comprise 20 of the 25 largest consumer goods distributors globally, including Wal-Mart, Amazon, Home Depot, and Costco.

Slate Retail explains that its leasing spreads have consistently outpaced inflation. Around 1.8 million square feet of leasing was completed in 2022 at a weighted average rent spread of 9%. Moreover, around 39% of its leases expire in the next three years, and 96% of tenants are on net leases, which offers protection against rising operating expenses.

In addition to its dividend yield, Slate Grocery stock is also trading at a discount of 21% to consensus price target estimates.

Exchange Income stock

One of the best-performing TSX stocks in the last two decades is Exchange Income (TSX:EIF). The Canadian stock has returned over 2,000% to shareholders since April 2005, easily outpacing most major indices.

Exchange Income’s segments include Aviation Services & Aerospace, and Manufacturing. So, the company provides scheduled airline, cargo, charter service, and emergency medical services in Canada.

It also manufactures goods such as access mats, window wall systems, communication infrastructure, stainless steel tanks, and components used in sectors such as aerospace, defence, and healthcare.

Exchange Income has increased its dividends 16 times since 2004 and currently offers a yield of 4.7%. Despite its outsized gains, EIF stock is priced at 14.8 times forward earnings, which is very cheap.

EIF stock is also priced at a discount of 20% compared to consensus price target estimates.

TransAlta Renewables stock

The final stock on my list is TransAlta Renewables (TSX:RNW), which pays shareholders a monthly dividend of $0.078, indicating a yield of 7.5%. One of the largest clean energy companies in Canada, TransAlta, has invested in highly contracted renewable and natural gas power-generation facilities and other infrastructure assets.

The company is well diversified in terms of geography and counterparties. It has interests in 26 wind facilities, 11 hydro facilities, eight natural gas generation facilities, two solar facilities, one battery storage project, and a natural gas pipeline, which represent an ownership interest of 2,965 megawatts.

Despite a difficult macro-environment, TransAlta stock increased adjusted earnings before interest, tax, depreciation, and amortization by 5% to $487 million in 2022. An extended outage at its Kent Hills facilities led to a decline in cash flows. But this is a near-term headwind, and TransAlta is on track to end 2023 with adjusted earnings of $0.71 per share, up from $0.28 per share in 2022.

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.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Aditya Raghunath has positions in TransAlta Renewables. The Motley Fool recommends Amazon.com, Home Depot, and Walmart. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

How Much Can You Really Earn in Passive TFSA Income?

With a diversified portfolio of high yield stocks like Enbridge (TSX:ENB) you could potentially get up to $4,400 per year…

Read more »

data analyze research
Dividend Stocks

2 Stocks to Invest in a Sideways Economy

Not all stocks are equally vulnerable to the weak economy and market, and the right stable investments can help you…

Read more »

Value for money
Dividend Stocks

Why Canadian Investors Should Add This Value Stock to Their Portfolios

This value stock is down now, but this comes all from outside impacts. A year from now, you'll likely wish…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

This 7.1% Dividend Stock Pays Serious Cash

After the pullback, Enbridge stock offers a compelling dividend yield of almost 7.1% It's a good consideration for passive income.

Read more »

stock research, analyze data
Dividend Stocks

3 TSX Stocks With Unbeatable Passive Income and Bargain Prices

Three TSX stocks trading at bargain prices are buying opportunities for their relatively safe and sustainable dividend payments.

Read more »

value for money
Dividend Stocks

3 Cheap Dividend Stocks Paying up to 10%

Income-seeking investors can consider buying shares of high-dividend stocks with monthly payouts, such as Slate Grocery REIT.

Read more »

Senior couple at the lake having a picnic
Dividend Stocks

Retirees: Here’s How to Boost Your CPP Pension

The CPP can only cover a portion of your daily expenses. Take control of your pension, and boost the $811…

Read more »

grow dividends
Dividend Stocks

Boost Your Passive Income With These 3 Cheap Dividend Stocks

Given their high yields and discounted stock prices, these three cheap dividend stocks could be an ideal buy to boost…

Read more »