Investing in stocks that pay dividends monthly and offer high yields is an excellent strategy for beginning a passive income stream. However, investors must be careful when choosing stocks, as dividends are not guaranteed. Companies can revoke their payouts in case of financial deterioration.
If an investor intends to earn $500 monthly in passive income, he should invest around $86,000 in monthly-paying stocks that offer over 7% yields. To this end, I am bullish on the following three stocks that offer over 7% dividend yields.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | INVESTMENT | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| NWH | $13.34 | 2148 | $28654.32 | $0.03 | $166.47 | Monthly |
| WCP | $9.87 | 2904 | $28662.48 | $0.0608 | $176.56 | Monthly |
| PZA | $4.87 | 5886 | $28664.82 | $0.0775 | $176.58 | Monthly |
| Total | $519.61 |
NorthWest Healthcare Properties REIT
NorthWest Healthcare Properties REIT (TSX:NWH.UN) owns and operates 210 healthcare properties, with a total leasable area of 17,399 square feet. Its long-term lease agreements with government-backed clients allow the company to enjoy higher occupancy and collection rates. Besides, most of its lease agreements are inflation-indexed, protecting its financials in this inflationary environment. The REIT has also strengthened its financial position by lowering its leverage. It has sold $566.5 million worth of non-core assets and unlisted securities since the beginning of last year, with the net proceeds utilized to pay off higher interest-bearing debts.
Further, NorthWest Healthcare is developing next-gen assets that can deliver long-term earnings growth for its investors. The Bank of Canada has slashed its benchmark interest rates twice this year. Investors are also hopeful of one more rate cut this year. Decreased interest rates could lower its interest expenses, thus boosting its financials. Considering all these factors, the company is well-equipped to continue paying dividends at a healthier rate in the coming years. Meanwhile, it currently offers a monthly dividend of $0.03/share, with its forward yield at 7.4%.
Whitecap Resources
Whitecap Resources (TSX:WCP) posted an impressive second-quarter performance last month, with record production of 177,314 barrels of oil equivalent per day. This represented 22% per share growth compared to the previous year’s corresponding quarter and above its internal forecast. Supported by its solid operational performance, the energy company’s top line and net income grew by 22.9% and 39.4%, respectively. It also generated free fund flows of $222.6 million, representing a 12.8% increase from the previous year’s quarter.
The oil and natural gas producer brought 33 wells into production during the quarter and spudded 27 wells. It expects to spend $0.9–$1.1 billion this year, while its average annual output would be between 167,000 and 172,000. The mid-point of the guidance represents 8.3% year-over-year growth. Further, the company’s management expects its production to grow at an annualized rate of 5% through 2029. The increased production and healthy commodity prices could boost its financials, allowing WCP to continue rewarding its shareholders with healthy dividends.
WCP currently pays a monthly dividend of $0.0608/share and has a forward yield of 7.4%. Its valuation also looks attractive, with an NTM (next 12 months) price-to-sales multiple of 1.6, making it an excellent buy.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX:PZA) has adopted an asset-light business model operating Pizza Pizza and Pizza 73 brand restaurants through franchisees. It collects royalties from franchisees based on their sales. So, its financials are less susceptible to rising commodity prices and wage inflation. Meanwhile, increasing menu prices to accommodate higher expenses could boost its royalty income.
Further, the pizza chain has posted positive same-store sales for the last 12 quarters, with its innovative and value menu offerings, technological innovations, and promotional activities. The company continues to expand its footprint and expects an increase of 3 to 4% in its store count this year. These expansions could boost its financials, making its future dividend payouts safer. With a monthly dividend of $0.0775/share, PZA offers a forward yield of 7%, making it an attractive buy.
