When it comes to investing your money and taking advantage of the power of compound interest, dividend stocks are some of the best investments you can make. So, when high-quality companies return cash to investors monthly rather than quarterly, they are certainly some of the top dividend stocks you can buy and hold forever.
Owning dividend stocks is ideal because, in addition to their capital gains potential, you also begin to earn a return on your investment almost immediately. So, when you can receive a dividend every single month, it allows you to invest that cash and put it back to work even quicker, taking full advantage of the power of compounding.
Furthermore, stocks that pay dividends monthly are often made for dividend investors. These are companies that are constantly generating significant cash flow and have strong enough margins to return cash to investors consistently.
So, if you’re looking to boost your passive income, here are three of the best monthly dividend stocks on the TSX to buy now.
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Two of the best real estate stocks on the TSX
If you’re looking to buy dividend stocks that return cash to you every month, the real estate sector is typically one of the best places to start.
There are plenty of high-quality real estate investment trusts (REITs) to consider, but two of the very best are Canadian Apartment Properties REIT (TSX:CAR.UN), the largest residential REIT in Canada and Granite REIT (TSX:GRT.UN), a high-potential industrial REIT with significant long-term growth potential.
Canadian Apartment Properties, or CAPREIT as it’s known, is one of the best to consider due to its sheer size and the significant diversification it offers.
CAPREIT owns properties all across Canada, which is ideal for several reasons. The significant diversification in its portfolio helps to mitigate regional real estate risks but also ensures that the REIT can take advantage of opportunities for growth all across the country.
By owning properties all across the country, CAPREIT has a tonne of organic growth potential as rental rates rise and as it invests in upgrading its existing properties, which it can then charge more for each month.
Therefore, as it consistently generates more cash flow, it offers significant capital gains potential and can constantly increase the distributions it pays to investors.
Furthermore, CAPREIT is currently trading at the bottom of its 52-week range, so you can buy the monthly dividend stock now while it’s undervalued and lock in a higher-than-normal yield.
For example, right now, the stock offers a yield of more than 3.7%, which is significantly higher than its five-year average dividend yield of 2.99%.
Meanwhile, Granite REIT is one of the best monthly dividend stocks to buy for many of the same reasons, despite the fact that it owns industrial properties like warehouses and distribution centres rather than residential properties.
It, too, is trading near the bottom of its 52-week range, and its dividend yield now sits at more than 5%, compared to its five-year average dividend yield of 4.1%.
Furthermore, Granite might even offer more growth potential than CAPREIT, especially as interest rates continue to fall and the economy starts to improve, given the significant demand for warehouse space by retailers as e-commerce continues to become more popular.
So, if you’re looking for monthly dividend stocks to buy now, these two real estate stocks are easily some of the best to consider.
One of the best monthly dividend stocks to buy now
In addition to the real estate sector, royalty companies like Pizza Pizza Royalty (TSX:PZA) are also ideal stocks for passive-income seekers.
Pizza Pizza, for example, generates significant cash flow by earning a royalty on all the sales done at its restaurants nationwide. Furthermore, because the fund has few expenses, it consistently aims to pay back nearly all the net income it generates each month.
So, not only does it pay a dividend every month, but its yield currently sits at more than 7.2%. That’s one of the highest yields on the TSX, making Pizza Pizza one of the best monthly dividend stocks you can buy now to boost the passive income your portfolio generates.
