Some market analysts observe that most companies that pay monthly dividends have higher-than-average yields. Real estate investment trusts (REITs) like Choice Properties (TSX: CHP.UN) are generous dividend payers. In the energy sector, Whitecap Resources (TSX: WCP) belongs to a handful of monthly income stocks.
If finances allow, you can double your passive income by investing $5,000 in each monthly dividend stock instead of $5,000 in only one. An added perk is the faster compounding of capital because you can reinvest the dividends 12 times a year, not the usual four. Over time, you can live off the monthly payouts and keep the principal intact.
The table shows the potential income streams from the combination:
| Company | Share Price | No. of Shares | Dividend per Share | Total Payout | Frequency |
| Choice Prop. | $14.46 | 346 | $0.74 | $256.66 | Monthly |
| Whitecap | $10.00 | 500 | $0.55 | $277.00 | Monthly |
The investment amount is nearly the same ($5,003.16 for CHP.UN and $5,000 for WCP) and the combined total payout is $533.66, or $44.47 per month. If your holding is in one stock only, the monthly passive income is either $21.39 or $23.08 for Choice or Whitecap, respectively.
National footprint
Choice Properties is a prominent name in the real estate industry for its long-time association or strategic relationship with anchor tenant Loblaw. George Weston Limited is a majority unitholder. This $10.5 billion landlord owns and operates retail properties with mostly necessity-based tenants. The REIT also owns industrial, mixed-use, and residential assets.
Its President and CEO, Rael Diamond, said, “Over the last five years, we have proven the effectiveness of our strategy and, looking ahead, our business is well positioned to execute on our strategic framework to deliver stable and growing unitholder returns.” Management’s strategic framework includes maintaining a market-leading portfolio, sustaining operational excellence, and delivering its development pipeline.
Despite the lower net income in Q1 2023 ($270.8 million) versus Q1 2022 ($386.9) million, Diamond said the operating and financial results indicate the quality and resiliency of the tenant base amid the ongoing market volatility. The average occupancy rate for the quarter is 97.7%, with the industrial assets (98.3%) having the highest. The current dividend yield is 5.13%.
Buy on weakness
Market analysts are bullish on Whitecap Resources and recommend a buy rating despite the slump of the energy sector in 2023. Their high price target in 12 months is $16.50, or a return potential of 65%. If you invest today, at the current share price, the dividend offer is 5.19%.
The $6 billion oil-weighted growth company’s premium asset base could deliver sustainable long-term growth, and free funds flow. While the $448 million funds flow in Q1 2023 is 11.4% lower than in Q1 2022, management said it reflects Whitecap’s higher liquids production.
In line with management’s return of capital focus, the energy stock raised its first-quarter dividends by 32% compared to Q4 2022. You can buy Whitecap on weakness, considering its strong and resilient outlook for 2023.
Smart move
Investing in Choice Properties and Whitecap Resources is a smart move because the monthly payouts enable frequent compounding of capital.
