There are quite a few elements you have to look into when you are choosing the right dividend stocks for your portfolio, including its yield, payout ratio, certain financial metrics, and dividend history. Dividend frequency, i.e., quarterly or monthly, is usually not a significant enough factor that may dissuade you from an otherwise solid dividend stock or encourage you to buy a relatively risky dividend stock.
But if it is an essential factor for you and you are looking for dividend payers with a monthly frequency, two stocks should be on your radar.
An apartment REIT
When it comes to monthly payouts, Canadian real estate investment trusts (REITs) are among the top choices since they usually stick to this payout frequency. Killam Apartment REIT (TSX: KMP.UN) is a decent pick among Canadian REITs, not just for its dividends and monthly payouts but also for its long-term capital-appreciation potential.
The REIT is currently offering payouts at a yield of around 3.9% and the payouts are quite financially sustainable. Killam used to grow its dividends and even though it hasn’t since 2021, the practice may come back, which will make Killam’s monthly payouts even more of an asset for its investors.
Killam also has business model and fundamental strengths that you might consider before you decide to invest in this REIT. It has a solid portfolio of real estate assets and has been steadily expanding into new regions.
The portfolio is also diversified asset-wise, with MHCs (Mobile Home Communities) making up a decent proportion of its overall portfolio. The financials are pretty consistent, with minor fluctuations.
A mortgage company
If you are seeking exposure to the mortgage industry in Canada, one of the bank stocks might be a more realistic pick. But even though big Canadian banks dominate the national mortgage industry, that’s just one element of their business.
A company like First National Financial (TSX: FN) might be better, as mortgage is its only business. It is among the largest non-bank mortgage lenders in Canada.
First National is also a generous dividend stock offering its investors monthly payouts. It’s also an established Dividend Aristocrat that has grown its payouts for 11 consecutive years and is currently offering a much more generous yield (6.6%) than most other Aristocrats in the Canadian financial sector (with similar track records).
The stock is currently both discounted and undervalued, considering its price-to-earnings ratio of just 8.2, so you might also experience some capital appreciation when the stock turns bullish.
Foolish takeaway
A Tax-Free Savings Account is the best place to stash these two monthly dividend payers. You will establish or augment an existing tax-free revenue stream, which will enhance your income or serve as passive income without beefing up your tax bill. That’s a two-pronged financial benefit.
