The Bank of Canada slashed interest rates four times last year and could continue its monetary easing initiatives this year. Amid falling interest rates, investors should look to invest in quality monthly-paying dividend stocks to earn a stable passive income. Against this backdrop, let’s look at four stocks that pay monthly dividends at over 7% dividend yields.
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Northland Power
Northland Power (TSX: NPI) owns or has an economic interest in 3.4 gigawatts of clean energy-producing facilities. It sells most of the power generated from these facilities through long-term contracts, thus earning around 90% of its revenue from contracted business and generating stable and predictable cash flows. Supported by these solid underlying businesses and asset base expansion, the clean-energy company has grown its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) at an annualized rate of 5% over the last five years.
Moreover, Northland Power has around 2.4 gigawatts of power-producing facilities under construction and expects to increase its capacity to 6 gigawatts by the end of 2027. Driven by these growth initiatives, the company’s management projects its adjusted EBITDA to grow at an annualized rate of 7–10% through 2027, thus making its future dividend payouts safer. Meanwhile, it currently offers an attractive forward dividend yield of 7.3% and trades at an attractive NTM (next 12 months) price-to-earnings multiple of 12.1, making it an excellent buy.
NorthWest Healthcare Properties REIT
Another monthly-paying dividend stock that offers a higher yield is NorthWest Healthcare Properties REIT (TSX:NWH.UN). The REIT owns and operates 186 healthcare properties across seven countries. It has signed long-term lease agreements with government-backed tenants, thus enjoying higher occupancy and collection rates. Moreover, its lease agreements are inflation-indexed, shielding its financials against rising expenses.
Besides, NorthWest Healthcare has undertaken several deleveraging initiatives, such as divestment of non-core assets, to strengthen its financial position. Under this program, the company has generated $1.3 billion as of November 14, utilizing the net proceeds from the sales to lower its debt levels. Besides, the company focuses on improving operating efficiency and has cut 16% of its workforce. Along with these initiatives, the rising operating income for the same property could support its financial growth, thus making its future payouts safer. Its forward dividend yield currently stands at 8.1%, making it an ideal buy.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) owns and operates Pizza Pizza and Pizza 73 brands restaurants. At the beginning of this year, the company added 45 restaurants to its royalty pool and removed 25 restaurants that ended their operations. After these additions, the company had 794 restaurants in its royalty pool, an increase of 20 restaurants compared to the previous year. Given the company’s highly franchised business, its financials are less susceptible to rising prices and wage inflation, allowing it to pay dividends at a healthier rate. It currently pays a monthly dividend of $0.0775/share, offering a healthy forward yield of 7.3%.
Moreover, PZA is working on improving its same-store sales after a weak performance in the last two quarters. With its value propositions, innovative menu offerings, and enhancements to its dine-in and digital experiences, the company’s management hopes to improve its sales in the coming quarters. Besides, the company continues to expand its restaurant footprint, which could boost its financials. Considering these growth initiatives, I believe the company could continue paying dividends at a healthier rate.
SmartCentres Real Estate Investment Trust
My final pick would be SmartCentres Real Estate Investment Trust (TSX: SRU.UN), which owns and operates 195 mixed-use properties across major Canadian cities. Supported by solid demand and execution, the REIT leased around 187,000 square feet of vacant space during the third quarter, thus expanding its occupancy rate to 98.5%. Besides, it witnessed an 8.2% increase in the same property net operating income compared to the previous year.
Moreover, SmartCentres REIT is expanding its asset base with 0.8 million square feet of properties under construction. The company is also witnessing healthy renewal rates with substantial rent growth. Given its diversified asset portfolio and quality tenant base, I believe the company could continue to witness healthy financials and cash flows, thus making its future dividend payouts safer. The Toronto-based REIT currently pays a monthly dividend of $0.15417/share, translating into a juicy forward yield of 7.7%.
