The Canadian stock market is continuing to witness big ups and downs in 2024. After surging to fresh record levels last month, the TSX Composite benchmark has seen roughly 4% downside correction to currently trade at 21,588 with 3% year-to-date gains. While the Bank of Canada’s recent decision to slash interest rates for the first time since March 2020 came as a big relief for markets earlier this month, investors still remain worried due mainly to uncertainties about future rate cuts.
As these uncertainties may keep the market volatile in the near term, it could be a wise decision for conservative investors to look for stable income sources instead of chasing growth right now. For such investors, Canadian dividend stocks that pay monthly cash distributions could be a great option. In this article, I’ll highlight one such high-yield monthly dividend stock that you can consider buying today and forget about short-term market volatility.
A top Canadian monthly dividend stock with an 8.9% yield
One of the best high-yield monthly dividend stocks that you can bet on right now is Peyto Exploration & Development (TSX: PEY). Peyto is a Calgary-headquartered oil and gas firm that primarily operates in Western Canada’s deep basin. Despite the market volatility, Peyto’s share prices have more than doubled over the last three years to currently trade at $40.75 per share with a market cap of $2.9 billion. The stock currently pays a monthly dividend of $0.11 per share, equivalent to an annual dividend of $1.32 per share. With this, it offers an attractive 8.9% annualized dividend yield at the current market price.
One of the main things that make Peyto a reliable monthly dividend stock to buy for the long term is its strong track record of generating free cash flows and rewarding its shareholders with consistent dividends. Now, let’s take a closer look at some key highlights from its latest financial results.
Strong financials with continued production gains
In the first quarter of 2024, Peyto’s average production volumes rose 21% YoY (year over year) to 125,018 barrels of oil equivalent per day as its recent acquisition of the Canadian upstream oil and gas business of Repsol Exploración contributed positively to its production levels. Even as natural gas prices declined sharply, Peyto’s effective hedging strategies helped the company post a solid 36% YoY jump in its quarterly revenue to $345.2 million, exceeding Street analyst expectations of $311.9 million.
To give you an idea about its long-term financial growth trends, the energy company’s adjusted annual earnings in five years between 2018 and 2023 soared by 108% with the help of revenue growth of 59%. To add optimism, Peyto also raised its dividend per share by roughly 83% during these five years.
Foolish bottom line
In recent quarters, Peyto’s investments in drilling activities have helped it increase production. Moreover, the company seems on track to benefit from the anticipated growth in natural gas demand in the long run supported by its strategic hedging and cost-management initiatives. Given that, I expect this high-yielding monthly dividend stock to continue soaring, which could help its investors not only earn monthly cash from dividends but also expect handsome capital appreciation in the years to come.
