Investing in dividend stocks can help you start a passive income stream. Moreover, investors can better align their investment income with regular financial commitments such as rent by choosing stocks that offer more frequent payouts, such as monthly dividends. Furthermore, these TSX stocks enable investors to reinvest dividends every 30 days. Reinvesting more frequently can boost your long-term returns and help create significant wealth.
With this background, let’s explore three fundamentally strong TSX stocks that are monthly dividend leaders.
Monthly dividend stock #1
Among the leading Canadian companies that offer monthly payouts, SmartCentres Real Estate Investment Trust (TSX: SRU.UN) looks attractive due to its solid dividend payments and high yield. The real estate investment trust (REIT) offers a high yield of 7.1%.
SmartCentres REIT owns a defensive portfolio of real estate, including high-traffic retail shopping centres and mixed-use properties. Moreover, it has a high-quality tenant base of large retailers that drives occupancy and rent collection and supports its net operating income (NOI) and payouts.
The REIT continues to benefit from solid leasing demand from both its existing tenants and new retailers. Moreover, SmartCentres’ occupancy rate stood at 98.2% at the end of the second quarter (Q2) of 2024. SmartCentres’ leadership highlighted that the firm was able to lease its properties at higher rents. Further, the company’s management expects the leasing, renewals, and renewal rate momentum to sustain in the coming quarters.
While SmartCentres’ retail portfolio will likely deliver consistent growth, the company’s revenue diversification strategy through expansion into mixed-use developments such as residential, office, and self-storage properties will likely accelerate its growth rate. Also, SmartCentres REIT has a large land bank, which augurs well for future growth.
Monthly dividend stock #2
Within REITs, investors could consider investing in Canadian Apartment Properties REIT or CAPREIT (TSX: CAR.UN). The REIT owns multi-unit residential properties like apartment buildings, townhouses, and manufactured home community sites and distributes monthly cash.
CAPREIT benefits from its high occupancy rate and growth in average rents. Further, its focus on controlling costs supports its NOI and dividend payouts. Notably, CAPTREIT’s occupancy rate stood at 98.2% on June 30, 2024 (end of Q2). Thanks to higher occupancy and rents, its operating revenue and NOI increased by 5.4% and 7.2%, respectively, in Q2.
CAPREIT is focusing on acquiring high-quality premium rental properties and divesting non-core assets. This move will likely improve its financials and position it well to enhance its shareholders’ return through regular dividend payments. Further, CAPREIT’s solid balance sheet, low leverage profile, and sustainable payout ratio suggest that investors can rely on this REIT for monthly cash.
Monthly dividend stock #3
Whitecap Resources (TSX: WCP) is a leading monthly dividend stock for passive income investors. The company operates in the energy sector and has a solid portfolio of premium assets with low maintenance capital requirements. Further, the company’s cost-efficient structure and increasing production volumes support its financials and distributions.
Whitecap plans to grow its asset base, which will drive its future cash flows. Further, its focus on an efficient conventional drilling program will cushion its earnings. The company has consistently grown its production and funds flow at a double-digit rate since 2010. Moreover, this momentum is likely to sustain given its high-quality assets, low debt structure, and strong balance sheet.
Currently, Whitecap pays a monthly dividend of $0.061 per share, reflecting an attractive yield of 6.7%.
