Investing in high-yielding monthly-paying dividend stocks would be one of the convenient ways to boost passive income. Secondary or passive income can help investors mitigate some of the impacts of price rises in this inflationary environment.
However, investors must be careful while choosing stocks, as ongoing rate hikes by central banks worldwide have dented the financial health of several Canadian companies. Here are my three top TSX picks to boost your passive income.
NorthWest Healthcare Properties REIT
NorthWest Healthcare Properties REIT (TSX:NWH.UN) is an excellent monthly-paying dividend stock to have in your portfolio, given its defensive healthcare portfolio, high occupancy rate, inflation-indexed rent, and high dividend yield. It enjoys a high-occupancy rate of 97%, with the weighted average of its lease expiration at 14 years. Besides, with 83% of its rent indexed to inflation, it is protected against rising prices.
Further, NorthWest Healthcare is working on lowering its debt levels amid rising interest rates. It has identified around $330 million worth of non-core assets, which it expects to sell in the second and third quarters. Along with the sale of non-core assets, the initiatives to lower its stake in its United States and United Kingdom joint ventures could generate net proceeds of around $550–$600 million. With these funds, the company plans to pay off high-interest rate bearing debt. Amid these initiatives, management hopes to grow its AFFO (average fund flows from operations) per unit by 20% this year, making its future dividend payouts safer.
Meanwhile, NorthWest Healthcare has lost a substantial percentage of its stock value over the last few months and trades close to its 52-week low due to rising interest rates. Amid the steep correction, its dividend yield has increased to 10.2%, making it an attractive buy.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) would be another solid monthly-paying dividend stock to have in your portfolio. Given its highly franchised business model, its cash flows are mostly stable. The company collects royalties from franchises based on their sales, not earnings. So, rising prices will have a minimal impact on the company’s financials.
Notably, the pizza chain posted a solid first-quarter performance, with its same-store sales and adjusted EPS (earnings per share) growing by 13.6% and 16.2%, respectively. The company’s solid value messaging, promotional activities, and price hikes drove its sales. Meanwhile, the uptrend in its financials could continue as it focuses on expanding its presence. It expects to increase its restaurant count by 3-4% this year, with a target of reaching 1,000 restaurants over the next few years. So, I believe this dividend-payer is well-equipped to continue with its dividend growth.
Supported by its solid financials, Pizza Pizza Royalty raised its monthly dividends by 3.6% to $0.0725, with its yield for the next 12 months at 5.92%.
TransAlta Renewables
TransAlta Renewables (TSX: RNW) is a power-producing company that focuses on renewable energy. It sells most of the power produced from these facilities through long-term PPAs (power-purchasing agreements), which offer stability to its financials from price and volume fluctuations.
In the recently reported first-quarter earnings, the company’s revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) declined by 6.9% and 7.9%, respectively. Lower wind resources and unplanned outages across the segments dragged its production volumes and revenue down. Along with lower revenue, higher operations, maintenance, and administrative expenses pulled the company’s adjusted EBITDA down.
However, the rehabilitation of the 13 wind towers at Kent Hills is progressing in line with expectations, and the company’s management is optimistic about putting these facilities into service this quarter. Besides, the company expects to begin the commercial operation of its Northern Goldfields facility and complete the expansion of its Mount Keith project this quarter. These growth prospects could boost TransAlta Renewables’ cash flows, thus making its monthly payouts safer. Meanwhile, the company currently pays a monthly dividend of $0.07833/share, with its yield for the next 12 months at 7.41%.
