Many investors dream of having a reliable source of monthly passive income, especially those nearing retirement or living off their savings. However, finding high-quality TSX stocks that pay monthly dividends is not easy, as most companies distribute their profits quarterly or semiannually. Moreover, some monthly dividend stocks have unsustainable payout ratios or weak financial foundations, which could affect their future distributions. That’s why investors need to be careful and selective when looking for monthly dividend stocks to add to their portfolios.
In this article, I’ll highlight two ultra-high-yield monthly dividend stocks that have strong business models, solid financial performance, and attractive long-term growth prospects.
Allied Properties REIT
Allied Properties REIT (TSX: AP.UN) is a Toronto-based, open-ended real estate investment trust (REIT) that specializes in managing and developing urban office environments in Canada. Its focus on converting light industrial structures into modern office spaces, primarily in central business districts, provides a unique niche that appeals to a range of professional and creative industries, making its business model reliable through consistent demand for centrally located office spaces.
This monthly dividend stock currently has a market cap of $2.4 billion as its stock trades at $17.35 per share after declining by nearly 20% in the last year. These declines in its share prices, however, have made Allied’s annualized dividend yield look even more attractive, which currently stands at an impressive 10.5%.
In the first quarter of 2024, Allied reported an operating income of $78 million from continuing operations, up 2% YoY (year over year). Despite some setbacks due to a fair value loss on investment properties in Toronto, Edmonton, and Montréal, the REIT maintained solid funds from operations at $81 million, while its adjusted funds from operations saw a slight uptick to $75 million from $74 million, indicating a resilient underlying operational efficiency.
As the trust remains focused on strategic portfolio optimization and enhancing user experiences to boost demand for its diverse categories of workspace, Allied Properties REIT could be a reliable long-term monthly dividend stock to invest in now.
Freehold Royalties stock
Freehold Royalties (TSX: FRU) is another high-yield dividend stock in Canada that pays monthly dividends. It currently has a market cap of $2.1 billion as its stock trades at $14.14 per share after rising by 4.4% over the last three months. At this market price, FRU stock has an impressive annualized dividend yield of 7.7%.
In the March quarter, Freehold generated $74 million in revenue and reported funds from operations totalling $54 million, or $0.36 per share. The company’s total production stood at 14,714 barrels of oil equivalent per day, maintaining stability across its operations despite severe weather impacts in North America. To add optimism, its production mix remained heavily weighted towards oil and natural gas liquids last quarter, comprising 63% of the total output, which should help it expand its margin in the near term.
Besides these positive factors, Freehold’s high-quality, oil-weighted assets in North America, and continued focus on new quality acquisitions brighten its long-term growth outlook, making this monthly dividend stock attractive to buy now and hold for years.
