The Bank of Canada has lowered its benchmark interest rates three times this year and could continue with its monetary easing initiatives. Amid falling interest rates, monthly paying dividend stocks offer an excellent opportunity to earn a stable passive income. The regular payout could help investors meet their recurring expenses, such as rent and utilities. Besides, investors can also reinvest the dividends to earn superior returns. Against this backdrop, let’s look at three top monthly paying dividend stocks to buy right now.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) has adopted an asset-light business model, operating Pizza Pizza and Pizza 73 brand restaurants through its franchisees. It collects royalties from franchisees based on their sales. So, its financials are less susceptible to rising expenses, such as higher commodity prices and wage inflation.
After posting positive same-store sales growth for 12 consecutive quarters, the company’s same-store sales fell 3.9% in the June-ending quarter. PZA’s management has blamed the challenging macro environment for the decline. Besides, given its high-quality and value-oriented menu offerings, the management hopes to retain its existing customers and win new ones. Moreover, the company continues to expand its footprint and expects to increase its restaurant count by 3-4% this year, boosting its financials.
Meanwhile, PZA has been under pressure over the last few months, losing around 18% of its stock value compared to its 52-week high. The pullback has lowered its NTM (next 12 months) price-to-earnings multiple to 12.6. While its forward dividend yield has increased to 7.5%. Considering its cheaper valuation and high yield, I believe PZA would be an excellent buy despite the near-term volatility.
NorthWest Healthcare Properties REIT
NorhtWest Healthcare Properties REIT (TSX:NWH.UN) owns and operates highly defensive healthcare properties across seven countries. The REIT has leased these properties to higher-quality tenants with long-term contracts, thus enjoying healthy occupancy and collection rates. Besides, most of these lease agreements are inflation-indexed, shielding its financials from the inflationary environment.
After a challenging couple of years, NorthWest Healthcare has witnessed healthy buying since February amid its improving financial position through its non-core assets sales program. The company has sold around 46 non-core assets under this program, generating gross proceeds of $1.4 billion. It has utilized the net proceeds from these sales to pay off higher interest-bearing debt, thus strengthening its financial position. Further, the company continues investing in next-gen properties, which can boost its financials and reward its shareholders with healthy dividend yields. Meanwhile, NWH currently pays a monthly dividend of $0.03/share, with its forward yield at 7.2%.
Savaria
Although Savaria (TSX: SIS) offers a lower dividend yield of 2.6%, investors can benefit from capital appreciation. The stock is up 35% this year amid its solid performance in the first two quarters, with its topline growing by 5.1%. Solid organic growth and favourable currency translation more than offset the negative impact of the divestment of Norway’s vehicle operations to drive its topline. Meanwhile, its adjusted EBITDA (earnings before interest, tax, deprecation, and amortization) margin has expanded by 300 basis points to 17.8%, while its adjusted EPS (earnings per share) grew 51.9% over the previous year.
Moreover, the accessibility solutions market is rising amid an aging population and increasing income levels. Besides, the company is investing in new product development and strengthening its production capabilities. Also, Savaria One, its multi-year initiative, could continue to drive its production and throughput. The initiatives could also improve its procurement and supply chain efficiencies. Amid these growth initiatives, Savaria’s management projects its topline to reach $1 billion next year while expanding its adjusted EBITDA margin to 20%.
