TFSA: Get Over $430 Each Month With These 3 Dividend Payers

Given their stable cash flows and consistent dividend payouts, these three monthly-paying dividend stocks could boost your passive income.

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Higher prices are hurting the purchasing power of consumers. So, a reliable secondary income could be beneficial. Investing in monthly-paying dividend stocks would be one of the convenient ways to earn a secondary income. Meanwhile, you can earn tax-free returns if you make these investments through TFSA (Tax-Free Saving Account).

For this year, the contribution room is $6,500. However, the cumulative amount for an investor who was 18 and above in 2009 would be $88,000. So, if you divide the entire amount equally among the following three Canadian monthly-paying dividend stocks, you can earn tax-free returns of over $430 every month.

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) operates quick-service restaurants under Pizza Pizza and Pizza 73 brand restaurants. The company operates a highly franchised business model, collecting royalties from its franchises based on their sales. So, rising wages and prices will not hurt its financials and will deliver stable financials and cash flows.

With the easing of pandemic-infused restrictions and the reopening of non-convectional restaurants, the company continues to generate strong cash flows, allowing it to raise its monthly dividends seven times since April 2020. It currently pays a monthly dividend of $0.075/share, with its forward yield at 6.11%.

Meanwhile, the quick-service restaurant operator has a strong franchisee pipeline, expecting to increase its restaurant count by 3-4% this year. It also intends to continue with its restaurant renovation program. Along with restaurant expansion plans, the positive same-store sales growth amid value messaging and promotional activities could boost its financials in the coming quarters, thus allowing it to pay dividends at a healthier rate. So, I believe Pizza Pizza Royalty would be an excellent buy for income-seeking investors.


Second on my list is Extendicare (TSX:EXE), which offers care and services for seniors across Canada. With the growing aging population, the demand for the company’s services could rise in the coming years. Meanwhile, last year, the company sold its retirement living operations to focus on lower capital-intensive and higher-margin long-term care (LTC) and home healthcare businesses.

Continuing this strategy, the LTC provider acquired a 15% interest in Revera’s portfolio of 25 LTC homes. The transaction includes $32.6 million in cash and an assumption of around $37.1 million in debt. Further, the company has received approval to construct a 256-bed LTC home in Peterborough, Ontario, to replace a 172-bed Class C home. The company’s management hopes to complete the construction by the end of 2025. Along with these growth initiatives, its improving healthcare volumes and LTC occupancy rate could boost its financials in the coming quarters, thus allowing it to pay dividends at a healthier rate.

Meanwhile, Extendicare now pays a monthly dividend of $0.04/share, with its yield currently at 6.69%. Besides, it trades at 0.5 times analysts’ projected sales for the next four quarters, making it an attractive buy at these levels.

Northland Power

Northland Power (TSX:NPI) develops, owns, and builds green power infrastructure with an economic interest in over three gigawatts of power-producing capacity. The company sells the power produced from these facilities through long-term PPA (power-purchase agreements), which stabilize its financials.

Besides, the company could benefit from the growing transition towards clean energy. Meanwhile, McKinsey is projecting that global electricity production from solar and on- and off-shore wind projects could triple between 2021 and 2030, thus expanding the addressable market for the company. Meanwhile, the clean energy producer has 20 gigawatts in the project pipeline, with 60% in off-shore, 25% in solar, 5% in on-shore, and 10% in others. Given its healthy growth prospects, I believe the company is well positioned to continue paying dividends at an impressive rate.

Meanwhile, Northland Power currently pays a monthly dividend of $0.10/share, with its forward yield at 4.88%. Besides, it trades at an attractive price-to-book multiple of 1.4.

Bottom line


Although the payouts from these three dividend stocks look safe, investing a significant amount in just a couple of stocks is not advisable. Investors can mitigate risks by diversifying their investments.

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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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