This 11.1% Dividend Stock Pays Cash Every Month

This energy stock offers a massive dividend, together with a solid near-term future for those wanting cash on hand every month.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published October 2, 2024 8:00 pm EDT

When considering a monthly dividend stock, investors want to look at a few key things – the stock’s dividend yield, how consistent and reliable the payments are, and whether the company has a track record of growth. Make sure the yield isn’t too high, as that could be a red flag. Then check if the company is financially strong enough to keep those payments coming. It’s also good to see if the stock price is relatively stable, so you’re not losing capital while enjoying those monthly payouts! So today, let’s look at one that ticks many of these boxes.

money cash dividends — Image source: Getty Images

The sector

Energy stocks can be a solid choice for monthly dividends. That’s because they’re often tied to essential services that people rely on, no matter how the economy is doing. Companies in the energy sector tend to generate consistent cash flow. That’s whether they’re focused on oil, gas, or renewable energy. And this is favourable for maintaining regular dividend payments. Many energy companies also have long-term contracts. That means revenue is more predictable, which helps support those lovely monthly dividend payouts.

Another reason energy stocks are great for monthly dividends is that many of them are committed to rewarding shareholders – especially in sectors like pipeline companies or utilities. These companies often have a strong focus on distributing cash back to investors, thus making them ideal if you’re looking for steady, reliable income. Plus, with the growing shift toward renewable energy, some companies are positioned for both long-term growth and regular income. Therefore, you get the best of both worlds!

Cardinal Energy

Cardinal Energy (TSX: CJ) is a solid player in the Canadian energy market, known for its focus on oil production and shareholder returns. In its most recent earnings report for Q2 2024, Cardinal showed strong revenue growth, driven by higher oil prices and increased production. The oil producer saw a 21% revenue increase over the previous quarter, largely thanks to improving oil price conditions and cost efficiencies. Cardinal also reduced its net debt by 17%, thus keeping its financial position strong while continuing to focus on sustainable capital deployment.

What sets Cardinal Energy apart is its commitment to both growth and dividends. The company allocated 36% of its adjusted funds flow directly to shareholder returns. This includes its monthly dividend. Their ongoing projects, like the Reford SAGD project in Saskatchewan, are progressing well, aiming to boost production and long-term sustainability. If you’re looking for a steady energy stock with a focus on monthly dividends, Cardinal Energy’s solid financial performance and strategic investments make it a worthwhile consideration.

What to consider

When considering Cardinal Energy for a monthly dividend, a few key points stand out. With a strong forward annual dividend yield of 11.1% at writing, its focus on rewarding shareholders is clear. However, the payout ratio of nearly 99% shows they’re distributing most of their earnings as dividends. This could be a concern if profits drop. Despite this, the energy stock has a solid revenue base and growth prospects, making it attractive for dividend investors.

Additionally, CJ has demonstrated healthy revenue growth, supported by efficient operations and a manageable debt level. Its focus on maintaining production while exploring new projects indicates long-term sustainability. However, keep an eye on the stock’s high beta of 2.8, as it can be volatile. That means those monthly dividends might come with some price swings.

Foolish takeaway

Cardinal Energy offers an attractive monthly dividend with a yield of over 11%, making it appealing for income-focused investors. However, its high payout ratio suggests that almost all profits go to dividends, which might be risky if earnings dip. The company shows solid revenue growth and a manageable debt level, but its higher stock volatility could mean price fluctuations. Overall, it’s a solid option for steady monthly dividends, though some caution is warranted.