A select group of Canadian stocks pay monthly dividends, not quarterly. The companies attract dividend earners who want monthly income streams. Some investors see an opportunity to maximize the power of compounding through dividend reinvesting.
However, investment choices depend on your preferred sector and risk tolerance. From 29 available stocks, five names in four sectors stand out as reliable monthly income providers.
Whitecap Resources (TSX:WCP) operates in a highly volatile oil & gas industry. Energy was the hottest sector last year but is the worst performer (-7.98%) thus far in 2023 due to weakening oil prices. At $9.44 per share, WCP trades at a discount (-10.06%) but pays a 6.07% dividend.
The $5.72 billion oil-weighted growth company relies on free funds flow to support current and future dividend payments. In the first quarter (Q1) 2023, cash flow from operating activities increased 20% year over year to $468.6 million, while free funds flow declined 33.9% to $194.4 million.
Fortunately, Whitecap’s low-decline, light oil assets delivered sustainable growth and profitability for over 25 years. According to management, its inventory supports multi-decade growth potential.
First National Financial (TSX:FN) trades at $38 per share with a year-to-date gain of 7.10%. Yield-hungry investors will delight at the generous 6.32% dividend. The $2.28 billion company originates, underwrites, and services commercial and residential mortgages in Canada through its wholly owned subsidiary.
Despite a shaky real estate sector and competitive marketplace, revenue in Q1 2023 rose 23% to $432.1 million versus Q1 2022, while net income climbed 33.4% to $35.7 million. Its president and chief executive officer (CEO), Jason Ellis, said the quarterly results reflect business strength and resiliency.
Ellis adds that due to a long-term securitization strategy, First National can create five- and 10-year income streams, notwithstanding lower mortgage origination.
Exchange Income Corporation (TSX:EIF) provides aerospace and aviation services and equipment while engaging in the manufacturing business. At $52.23 per share (+1.24% year to date), you can partake in the 4.87% dividend. The $2.22 billion company continues to thrive amid a challenging environment.
In Q1 2023, revenue and net income jumped 32% and 83% to $526.8 million and $6.86 million versus Q1 2022. The free cash flow (FCF) rose 27.7% to $60 million, a new first-quarter record for the company. Management said the business is well positioned to grow, notwithstanding headwinds from inflation and tightening monetary policy.
Keg Royalties (TSX:KEG.UN) and A&W Revenue Royalties (TSX:AW.UN) are good prospects in the restaurant industry. The former operates in the casual dining restaurant segment and has a market cap of $268.7 million. Meanwhile, the latter is nearly double in size ($522.17 million) and well known in the quick-service restaurant (QSR) industry.
Keg, Canada’s second-largest QSR, trades at $15.99 per share (+2.54% year to date) and pays a 7.1% dividend. At $35.80 per share, A&W’s dividend offer is 5.36%. Both income funds are consistent monthly dividend payers, so brand, size, and target market could be the deciding factors.
The five monthly dividend payers aren’t typical core holdings in a stock portfolio but are excellent second-liners for their generous dividends and payout frequency (12 instead of four). Furthermore, they are ideal in tax-advantaged investment accounts if you want tax-free money growth.