When you’re looking for monthly dividend stocks, either you get a solid payout with questionable reliability or reliability with a less attractive yield. It’s rare to find one that pays monthly and looks rock solid. Many high-yield stocks come with issues like too much debt, uneven cash flow, or industry risks. Yet, some monthly dividend titans, such as Peyto Exploration & Development (TSX: PEY), really shine for all the right reasons.
After rallying 23% over the last year, Peyto stock is trading at $19.01 per share with a market cap of $3.8 billion. And yes, it offers an attractive 6.9% annualized dividend yield, distributed monthly, making it a solid choice for investors hunting for a safe monthly dividend stock.
Now, let’s look at some key fundamental factors that make it a safe dividend stock for the long term.
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Strong pricing power
One of the biggest reasons I find Peyto to be an unbelievably secure monthly dividend stock is its strong pricing power supported by a robust hedging strategy.
Notably, the Calgary-based firm operates in Alberta’s Deep Basin and owns a processing capacity of over 1.5 billion cubic feet per day, with more than 90% operated infrastructure. That level of control helps Peyto manage costs and maximize profits.
In the latest quarter (ended in March), Peyto secured a selling price of $4.17 for every thousand cubic feet of natural gas it produced — almost double what others were getting in Alberta’s local market. That hedging move alone added $50.8 million to its gains, boosting its funds from operations and helping it reduce net debt by $65.7 million in the quarter.
Cost discipline sets it apart
Another strong reason Peyto looks like a safe monthly dividend stock you can hold for the long term is its relentless focus on keeping costs low.
While many companies are dealing with rising expenses, Peyto kept its overall costs low at just $1.42 for each unit of natural gas it produced in the first quarter. That included royalties, transportation, operating expenses, and interest — making it one of the lowest-cost operators among Canadian gas producers.
Even its operating margin stood strong at 71% last quarter, a figure that’s rarely seen in the industry. This level of efficiency not only supports its monthly dividend but also gives Peyto flexibility to manage production smartly when prices fluctuate.
Growth-ready assets provide upside
One more reason Peyto looks like a safe long-term bet is that it has ample room for growth without the need to overspend.
With its large reserve base and excess processing capacity, Peyto can keep growing without having to build new plants. Its first-quarter production rose 7% year over year to 133,883 barrels of oil equivalent per day. The company has over 1,600 booked drilling locations and plans to add 70–80 new wells in 2025. In addition, a multi-year supply deal tied to Alberta’s power market gives it another layer of revenue diversification.
This built-in growth potential helps Peyto maintain consistent cash flow while offering upside as gas demand increases in North America.
