Your Guide to the Best Monthly Dividend Stocks in Canada

Three of the best monthly dividend stocks in Canada have market-beating returns despite the elevated volatility in 2023.

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Sustained, uninterrupted payouts, regardless of the economic environment, are the most important to dividend investors. That is why many Canadian companies still pay dividends despite unsuitable or lower profits to maintain their dividend track records and keep shareholders loyal.

As of this writing, the TSX has around 643 dividend stocks, and those paying quarterly dividends outnumber monthly income stocks. While either payout frequency provides income streams, other dividend earners prefer receiving monthly dividends for two specific reasons.

Advantages of monthly dividends

Receiving monthly dividends is like having a regular income to incorporate into your monthly budget. You can allocate it for savings, regular bills, or recurring expenses. Some retirees need them to augment their monthly pensions. You can’t have such benefits with quarterly payouts.

Monthly dividends are perfect for people with long-term financial goals or building a nest egg for retirement. Money compounds faster if you reinvest dividends 12 times a year, not 4. You generate more income by consistently adding additional shares every time you receive dividends.

Canadians seeking monthly dividends have several dependable options on the TSX. The yields range from medium to high, depending on your risk tolerance and appreciation of the business.

Prospect 1

Income-focused investors, including retirees prioritizing steady monthly income, will find Sienna Senior Living (TSX:SIA) attractive. The $793.2 million company owns and operates seniors’ living residences and manages a dozen more for third parties. If you invest today, the healthcare stock ($10.87 per share) pays a sumptuous 8.61% dividend.

Sienna suffered a business reversal due to the global pandemic but is slowly regaining lost ground. In the first nine months of 2023, total adjusted revenue and net operating income (NOI) increased 10% and 11.5% year-over-year to $54.2 million and $113.1 million, respectively. The average total occupancy rate reached 87.2% at the end of the third quarter.

The topmost positive factor for Sienna moving forward is the strong long-term demand fundamentals in Canadian senior living. Rising rental rates and the fastest-growing demographic in Canada (seniors) are solid combinations.

Prospect 2

Dream Industrial (TSX:DIR.UN) is a top-of-mind choice in the real estate sector. This $3.6 billion real estate investment trust (REIT) owns and operates industrial properties in Canada, Europe, and the United States. The 97.2% in-place and committed occupancy confirms the high demand for multi-functional light industrial properties.

Management strongly believes that robust industrial fundamentals will continue to drive contractual rental rate growth. Dream Industrial plans to redevelop existing properties and pursue greenfield development. At $12.42 per share, you can partake in the lucrative 5.62% dividend.    

Prospect 3

First National Financial Corporation (TSX:FN) underwrites and services prime residential (single-family and multi-unit) and commercial mortgages through its subsidiary First National Financial LP. This $2.3 billion financial services company has implemented 17 dividend hikes since going public in 2006.

At $38 per share, the 6.33% dividend yield should be enticing to yield-hungry investors. Shareholders of record at the close of business on November 30, 2023 will receive a special, one-time dividend of $0.75 per common share on December 15, 2023.

Market-beating returns

Monthly dividend-payers Sienna Senior Living, Dream Industrial, and First National Financial have market-beating returns in 2023. The businesses are doing well amid strong headwinds and elevated volatility in 2023.

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 Dream Industrial Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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