Canadian investors can begin a stable and recurring passive stream by buying quality monthly-paying dividend stocks.
Here are three top stocks that could help you generate market-beating returns over time.
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Savaria stock
Savaria (TSX: SIS) designs, manufactures, distributes, and installs accessibility products like stairlifts. The $1.6 billion company also makes therapeutics support surfaces and other pressure management products for medical beds.
In Q2 of 2024, Savaria reported revenue of $221.3 million, an increase of 11.6% year over year. In the last 12 months, the company’s gross margins have expanded from 33.8% to 37.5%, allowing Savaria to increase operating income by almost 40% to $22.6 million. Its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growth was even higher, at 43.3%. Due to strong demand across business segments, Savaria expects to end 2025 with more than $1 billion in sales and an EBITDA margin of over 20%.
The stock has returned close to 800% (after adjusting for dividend reinvestments) since October 2014. It offers a forward yield of 2.3%, and over the last 19 years, Savaria has raised its dividends at a compounded annual growth rate of 16%, enhancing its effective yield over time.
Whitecap Resources stock
Valued at $6.6 billion by market cap, Whitecap Resources (TSX: WCP) is a Canada-based oil and gas company that acquires and develops petroleum and natural gas properties.
In the June quarter, Whitecap reported an operating funds flow of $426 million, or $0.71 per share. It spent over $200 million in capital expenditures and reported a free funds flow of $223 million, or $0.37 per share. Given its dividend expense, Whitecap’s dividend payout was less than 50%, providing it with room to reinvest in acquisitions and lower balance sheet debt.
WCP stock has returned just 32% to shareholders in dividend-adjusted gains over the past decade. However, the company continues to grow at an enviable pace and trades at a cheap valuation in October 2024, priced at just 6.8 times forward earnings. With a forward yield of 6.6%, Whitecap should be on investors’ radar today.
Exchange Income stock
The final TSX dividend stock on my list is Exchange Income (TSX: EIF), which offers a yield of almost 5%. In Q2 of 2024, Exchange Income reported revenue of $661 million, an increase of 5% year over year. Its adjusted EBITDA also grew 7% to $157 million, while free cash flow rose 3% to $101 million.
Exchange Income’s dividend payout ratio has been 61% in the last 12 months, which is sustainable.
Priced at less than 18 times forward earnings, Exchange Income stock trades at a 20% discount to consensus price target estimates. Comparatively, adjusted earnings growth is forecast at more than 12.5% annually between 2025 and 2028.
