After declining for several months, Canadian stocks have witnessed a healthy recovery in the last one and a half months, with growing hopes that the central banks in the United States and Canada will cut interest rates next year. While the broader market has started rising, many fundamentally strong dividend stocks still look cheap.
This could be the right time to buy such dividend stocks as the recent weakness in their share prices has made their dividend yields look increasingly attractive. In this article, I’ll highlight two top Canadian dividend stocks, with solid yields of more than 7%, that I find worth considering in December 2023. Interestingly, both stocks I’ll talk about distribute their dividend payouts every month, which could help investors create a source of monthly passive income.
Freehold Royalties stock
Freehold Royalties (TSX: FRU) is the first fundamentally strong monthly dividend stock with high yields you can consider now. This Calgary-headquartered energy sector-focused royalty firm currently has a market cap of $2.1 billion, as its stock trades at $13.91 per share with nearly 12.1% year-to-date losses. This downside correction in the stock comes after it rallied by about 204% in the previous two years combined. At the current market price, FRU stock offers a 7.7% annualized dividend yield.
In the third quarter of 2023, Freehold posted strong operational results with a record U.S. production of 5,427 barrels of oil equivalent per day, marking a 12% sequential and a 17% YoY (year-over-year) increase. This surge in U.S. operations contributed to funds from operations (FFO), which stood at $65 million for the first three quarters of the year. Despite a slight decrease in Canadian production due mainly to wildfires, its leasing activity continued to strengthen as Freehold signed a record 102 agreements in these three quarters.
Overall, these results highlight Freehold’s continued progress on its successful North American strategy and focus on delivering consistent, sustainable returns to shareholders. Given these strong fundamentals and its 12% year-to-date losses, this monthly dividend stock looks attractive to buy today and hold for the long term.
Allied Properties REIT stock
Allied Properties REIT (TSX: AP.UN) could be another top Canadian monthly dividend stock to consider in December, which has an even stronger annualized dividend yield of 9.2% at the current market price. This open-ended real estate investment trust (REIT) primarily focuses on operating distinctive urban workspaces in multiple Canadian cities. The company currently has a market cap of $2.5 billion as its stock trades at $19.16 per share after sliding by more than 23% so far in 2023.
In the quarter ended in September 2023, Allied’s adjusted FFO per unit grew positively, resulting in higher net operating income from its rental and total portfolios. The REIT’s leasing activity during the quarter remained strong, with improved lease tours and square footage leased, which could potentially translate into higher rental income for the company in the future.
Recently, Allied sold its portfolio of urban data centers in a deal worth $1.35 billion. This move has helped the company reduce debt and make funds available for future developments. Its strengthening financial position and increased focus on the urban workspace segment make Allied stock look even more attractive after its recent declines.
