The Bank of Canada has slashed interest rates twice this year, and investors are hoping for one more rate cut. Amid falling interest rates, investing in monthly-paying dividend stocks would be an excellent strategy to earn a stable passive income. Meanwhile, the following four stocks pay dividends monthly and are trading under $20.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) has adopted an asset-light business model, operating 774 Pizza Pizza and Pizza 73 brand restaurants through franchisees. It collects royalties from franchisees based on their sales. So, its royalty pool income is not susceptible to rising prices and wage inflation, thus generating stable and predictable cash flows.
After reporting positive same-store sales for the previous 12 quarters, PZA’s same-store sales fell 3.9% in the June-ending quarter. The company’s management has blamed challenging macro factors for the decline. Further, the company’s management is confident of retaining its existing customers and winning new ones through its high-quality, value-oriented menu offerings. After opening 25 restaurants in Canada and two in Mexico in the first half, the company continues to expand its footprint. It expects its restaurant count to increase by 3-4% this year.
Given its stable cash flows and high growth prospects, I believe PZA could continue paying monthly dividends at a healthy rate. Currently, it offers a juicy forward dividend yield of 7.18%.
NorthWest Healthcare Properties REIT
Another monthly-paying dividend stock with an over 7% dividend yield is NorthWest Healthcare Properties REIT (TSX:NWH.UN). The real estate investment trust (REIT) owns and operates 186 healthcare properties and has signed long-term lease agreements with government-backed tenants. Thus, the company enjoys a healthy occupancy and collection rate. Also, its inflation-indexed lease agreements shield its financials from rising prices.
Under its non-core assets sales program, the company has sold 46 properties, generating $1.4 billion. The company has utilized these net proceeds to pay off high interest-bearing debt, thus strengthening its financial position. It has a solid developmental pipeline of next-gen assets, which can generate long-term earnings growth. Amid improving financial position and healthy growth prospects, I believe NorthWest’s future dividend payouts are safe.
Whitecap Resources
Third on my list is Whitecap Resources (TSX: WCP), which reported an impressive second-quarter performance last month. Its topline and net income grew by 22.9% and 39.4%, respectively. Increased production and higher selling prices drove its financials. Its free fund flows for the quarter stood at $222.6 million, representing a 12.8% increase from the previous year’s quarter.
Further, WCP has planned to invest around $0.9-$1.1 billion this year, strengthening its production capacity. Meanwhile, the company’s management projects its top line (midpoint of the guidance) to grow 8.3% from the previous year. In the long run, the company expects its total production to grow at an annualized rate of 5% through 2029. Analysts are projecting oil prices to remain elevated in the near to medium term. Increasing production and elevated prices could boost WCP’s cash flows, allowing it to continue rewarding its shareholders with healthy monthly dividends. Currently, it is paying a monthly dividend of $0.0608/share, with its forward dividend yield at 7.18%.
Extendicare
My final pick is Extendicare (TSX: EXE), which provides long-term care (LTC) and home care under various brands. Last week, the company reported an excellent second-quarter performance, with its revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growing by 13.3% and 61.7%. The strong performance across its three segments boosted its financials.
The revenue from its long-term care segment grew 6.5% amid increased occupancy rate, higher funding, and the timing of its spending. Supported by increased average daily volume and rate increases, the revenue from Home Healthcare grew by 17.2%. Its revenue from the managed services more than doubled to $18 million amid the Revera and Axium transactions. Given its improving operating metrics and continued expansion, I expect the uptrend in Extendicare’s financials to continue, making its future dividend payouts safer. With a monthly dividend of $0.04/share, its forward yield stands at a healthy 5.60%.
