I’d Put $7,000 in This Monthly Dividend Machine for Decades

Canadian dividend stocks with monthly payouts and the ability to consistently increase their distributions are income machines for your portfolio. Notably, monthly dividend stocks with sustainable payouts offer a unique advantage compared to those that pay quarterly. The higher payout frequency means cash lands in your account more often, which provides greater flexibility.

Whether you’re reinvesting those dividends to compound your returns or simply using them to support your lifestyle, having money show up every month makes a meaningful difference. Over the long haul, reinvesting monthly dividends, especially those with high and sustainable yields, can lead to impressive total returns through compounding.

I’d also look to leverage the Tax-Free Savings Account (TFSA) to take advantage of these opportunities. This account is tailor-made for income-generating assets because all dividends, interest, and capital gains earned within it are completely tax-free. Thus, it enhances total returns in the long term.

With the 2025 TFSA contribution limit set at $7,000, here is a monthly dividend machine I’d buy and hold for decades.

The monthly dividend machine

While the TSX has several high-quality stocks that pay monthly dividends, First National (TSX:FN) stands out for its ability to pay and increase its distributions. Moreover, it offers a high yield, making it a monthly dividend machine.

As a leading non-bank mortgage lender in Canada, it specializes in providing mortgage financing solutions for both residential and commercial markets. The company’s solid portfolio of mortgages under administration (MUA) generates consistent income and cash flow, supporting its dividend payouts.

Since its initial public offering in 2006, First National has demonstrated impressive dividend growth, having increased its payouts 18 times. Its shareholders get a monthly dividend of $0.208 per share, translating into an attractive yield of 6.6%.

First National’s consistent track record of dividend increases reflects its commitment to delivering strong returns to investors while maintaining financial stability and capital efficiency.

Why is First National a dependable dividend stock?

First National Financial is a dependable dividend stock in Canada, thanks to its resilient business model and consistent income generation. The non-bank mortgage originator and underwriter leverages its large scale and strong relationships with independent brokers to drive efficiency and growth. The company focuses on high-quality, low-risk mortgages, and most of its mortgages under administration (MUA) carry no residual credit risk.

First National’s diverse product mix across residential and commercial markets benefits from cross-market referrals and cost efficiencies. Its single-family mortgage business is a steady revenue engine, generating recurring cash flow through placement, securitization, and servicing. This also expands its mortgage portfolio, lowers servicing costs per loan, and enhances long-term profitability.

Despite economic uncertainties and potential recessionary pressures, First National is optimistic. It expects strong year-over-year growth in single-family originations, backed by a healthy pipeline. Commercial volumes should remain stable, supported by government housing incentives and anticipated Bank of Canada rate cuts.

Looking ahead, First National’s $45 billion in securitized mortgages and $107 billion servicing portfolio provide a solid base for sustained income growth and steady dividend payouts. Further, with a strong renewal pipeline and disciplined risk management, First National remains well-positioned to enhance its shareholder value.

Bottom line

First National is a dependable, high-yield monthly dividend stock with the potential to pay and increase its distributions over time. The table below shows that investing $7,000 in this dividend machine will generate a tax-free income of $38.48 per month.