Double Your Passive Income: Invest in These 2 Monthly Dividend Stocks

Investing in monthly dividend stocks gives a financial advantage by enabling frequent compounding of capital.

| More on:
growing plant shoots on stacked coins

Image source: Getty Images

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:

CompanyShare PriceNo. of SharesDividend per ShareTotal PayoutFrequency
Choice Prop.$14.46346$0.74$256.66Monthly

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 LoblawGeorge 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.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Whitecap Resources. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

Monthly Passive Income: 2 Top TSX Dividend Stocks to Buy in June 2023

Here are two of the best TSX monthly dividend stocks you can buy in June 2023.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June 2023

Top TSX dividend stocks are now on sale.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 TSX Dividend Stocks That Reliably Pay You Cash

With strong underlying businesses, high-yielding dividends, and stable cash flows, these two TSX stocks can be excellent investments to consider.

Read more »

sad concerned deep in thought
Dividend Stocks

Better Buy for TFSA Passive Income: Telus Stock or TD Bank? 

Your passive income depends on the dividend yield you lock in. Telus and TD Bank are good investments, but which…

Read more »

Dividend Stocks

Turn a $10,000 Investment Into $844 in Cash Every Year

The power of compound interest from regular investments in quality dividend stocks can deliver solid long-term returns and make you…

Read more »

Dividend Stocks

Grab This 10.8% Dividend Yield Before It’s Gone!

This dividend stock is down 43% in the last year, and it's about to turn around in the near future.…

Read more »

grow dividends
Dividend Stocks

2 TSX Dividend Stocks With Seriously Huge Payouts 

If you are looking for dividend payouts of up to 7-11% of the stock price, now is the time, as…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Dividend Stocks

For $1,000 in Annual Income, Buy 1,163 Shares of This TSX Stock

Fiera Capital is a popular TSX dividend stock as it currently offers a tasty yield of 13.3%. But is the…

Read more »