The Bank of Canada has cut its benchmark interest rates six times since June last year. Amid falling interest rates, investors could consider monthly-paying dividend stocks that offer higher yields to earn a stable passive income. Against this backdrop, let’s look at two solid dividend stocks that pay monthly payouts at healthier rates.
Extendicare
Amid the aging population and increased lifespans, the demand for care and services for seniors across Canada is growing. So, as my first pick, I have chosen Extendicare (TSX:EXE), which provides various services to seniors under multiple brands. It reported an excellent third-quarter performance that ended in September, with its top line growing by 11.3% to $359.1 million. The increase in long-term-care (LTC) funding, growth in home healthcare average daily volume, rate increases, and higher revenue from managed services drove its top line.
Amid topline growth and expansion of its net operating income, its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 42.4% to $36.1 million. Also, its adjusted funds from operations increased by 88% to $23.1 million amid higher adjusted EBITDA and lower maintenance capital expenditure.
Moreover, Extendicare is continuing its redevelopment program and has started the construction of its 256-bed LTC home in St. Catharines. The company expects to open the facility in the first quarter of 2027. The company has signed an agreement with Revera to acquire nine Class C LTC homes for $60.3 million and expects to complete the deal by mid-2025. So, its growth prospects look healthy. Further, the company strengthened its liquidity by raising $275 million through a senior secured credit facility.
Considering all these factors, I believe Extendicare could continue rewarding its shareholders with healthy dividend yields. Its current monthly payout of $0.04/share translates into a forward dividend yield of 4.23% as of the February 18th closing price.
NorthWest Healthcare Properties REIT
Northwest Healthcare Properties REIT (TSX:NWH.UN) is another solid monthly-paying dividend stock to have in your portfolio. The real estate investment trust (REIT) owns and operates 186 properties with a gross leasable area of 16.1 million square feet. Its highly defensive healthcare portfolio, government-backed tenants, and long-term lease agreements (with 13.4 years weighted average lease agreements) have led to healthy occupancy and collection rates. Around 85% of its rents are inflation-indexed, thus shielding its financials from rising expenses. The company has been witnessing a healthier renewal rate.
Moreover, NorthWest Healthcare REIT has disposed of non-core assets and unlisted securities, generating $1.36 billion in 2024. The company has utilized the net proceeds from these dispositions to repay high-cost corporate debt. With the falling interest rates, its weighted average cost of debt is falling, improving its profitability.
Further, the Toronto-based REIT has raised $500 million by issuing senior unsecured debentures. It plans to utilize the net proceeds from the offering to repay its outstanding indebtedness. Considering its improving financial position and healthy cash flows from higher occupancy and collection rates, I expect NorthWest Healthcare is well-positioned to continue paying dividends at a healthier rate. Its current monthly payout of $0.04/share translates into a juicy forward dividend yield of 7.14%. Its price-to-book multiple stands at an attractive multiple of 0.8, making it an attractive buy.
