Investing in monthly paying dividend stocks is a smart strategy to earn a stable passive income as interest rates fall. The passive income would help investors meet recurring expenses like rent and utilities. Also, investors could reinvest the dividends to earn superior returns. Against this backdrop, let’s look at four top monthly paying dividend stocks that you can buy under $20.
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Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) has adopted an asset-light business model, operating 672 Pizza Pizza and 102 Pizza 73 brand restaurants through its franchisees. With the company’s royalties tied to franchisees’s sales, its financials are resilient to rising commodity prices and wage inflation. So, the company’s cash flows are stable and predictable, thus allowing it to reward its shareholders with healthy dividends. Currently, the company offers a monthly dividend of $0.0775/share, with its forward yield at 7%.
Although its same-store sales declined during the June-ending quarter, PZA’s management is confident in retaining existing customers and winning new ones through its high-quality, value-oriented menu offerings. Besides, the company is expanding its restaurant network and renovating old restaurants. These growth initiatives could boost its sales, thus making its future dividend payouts safer.
NorthWest Healthcare Properties REIT
NorthWest Healthcare Properties REIT (TSXNWH.UN) owns and operates highly defensive healthcare properties in seven countries. It has signed long-term lease agreements with government-backed tenants, thus enjoying healthy occupancy and collection rates. Further, its inflation-indexed lease agreements shield its financials in an inflationary environment.
Further, NorthWest Healthcare has strengthened its balance sheet by adopting a non-core assets sales program. Since its inception in August last year, the company has generated $1.4 billion by divesting 46 properties and $170.3 million by disposing of unlisted securities. The company has utilized the net proceeds from these sales to pay off higher interest-bearing debt. Further, the REIT is developing next-gen properties to deliver long-term earnings growth, thus making its future dividend payouts safer. Currently, NWH pays a monthly dividend of $0.03/share, with its forward dividend yield at 6.5% as of the October 8 closing price.
Whitecap Resources
Amid the escalating Middle East conflict, oil prices have strengthened around 13% from last month’s lows. Meanwhile, oil prices could rise further if the conflicts evolve into a wider regional war. Rising prices could benefit oil and natural gas-producing companies like Whitecap Resources (TSX: WCP).
After a solid operational performance in the first six months, WCP’s management expects the strong performance to continue in the remaining months of this year amid its ability to mitigate downtime during planned and unplanned events. So, the company’s management projects its average production for this year could come closer to the higher end of the earlier provided guidance of 167,000–172,000 barrels of oil equivalent per day.
Further, the oil and natural gas producer has planned to make a capital investment of around $6 billion from 2025 to 2029, expanding its total average production at an annualized rate of 5%. Given its growth prospects, I believe WCP is well-positioned to continue paying dividends at a healthier rate. With a monthly dividend of $0.0608/share, the company currently offers a forward dividend yield of 6.8%.
Extendicare
Extendicare (TSX: EXE), which offers long-term care (LTC) and home care under various brands, posted a solid second-quarter performance in August. The company’s average daily volume of home health care increased by 10.8% to 30,027, while the average occupancy of LTC increased by 60 basis points to 97.8%. Amid solid operating performance, its topline grew by 13.3%, while its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) expanded by 160% to $38.6 million.
Further, Extendicare strengthened its financial position by selling a 256-bed LTC redevelopment project in Orleans and a Class C LTC home in Sudbury. Its financial position looks solid, with cash and cash equivalents of $136.4 million and $72.2 million of undrawn demand credit facilities at the end of the second quarter. So, the company is well-equipped to fund its growth initiatives, thus making its future dividend payouts safer. With a monthly dividend of $0.04/share, the company’s forward yield currently stands at 5.2%.
