When inflation is high and the cost of living keeps climbing, reliable income from investments becomes more important than ever. One of the best ways to generate this income is through dividend-paying stocks on the TSX. And if I had $20,000 to invest right now, I’d seriously consider putting it into Peyto Exploration & Development (TSX: PEY). This dividend-paying energy stock offers both stability and strong returns, especially for those looking to boost their monthly cash flow.
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About Peyto
Peyto is one of Canada’s most established natural gas producers. Based in Alberta, it focuses on exploration and development in the Deep Basin, an area rich in natural gas and natural gas liquids. What sets it apart is how efficiently it runs its operations. The dividend stock built a reputation for keeping costs low and margins strong. That gives it the flexibility to return more cash to shareholders, something that’s especially appealing in a world where interest rates are uncertain and recession fears loom.
Right now, Peyto trades for about $20.60 per share. Its annual dividend sits at $1.32 per share, which works out to a dividend yield of around 6.4%. That’s far above the TSX average. So, if you were to invest $20,000 at today’s price, you could buy 969 shares. At $1.32 per share annually, that means you’d receive almost $1,280 in passive income each year. That’s about $107 every single month just for holding the dividend stock!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTED AMOUNT |
|---|---|---|---|---|---|---|
| PEY | $20.62 | 969 | $1.32 | $1,278.98 | Monthly | $19,982.78 |
That level of income is especially appealing inside a TFSA. Because dividends in a TFSA are tax-free, every dollar of that $1,280 stays in your pocket. You don’t have to worry about tax slips or losing part of your income to the Canada Revenue Agency (CRA). It’s one of the most efficient ways to generate passive income in Canada, and Peyto fits perfectly into that strategy.
Why it works
Looking at the company’s most recent earnings, Peyto continues to perform well. In the first quarter of 2025, it reported revenue of $323.8 million and earnings per share (EPS) of $0.57. While natural gas prices have come down from their highs, Peyto remains profitable and has kept its payout ratio in check. Over the last twelve months, earnings per share came in at $1.48. This means its current dividend payout is comfortably below earnings, which suggests that the dividend is sustainable.
Peyto also pays its dividend monthly, which makes budgeting much easier for investors looking to build consistent cash flow. The monthly payout has held steady at $0.11 per share for the last 12 months. That consistency is hard to find, especially in the energy sector, where prices can swing wildly. But Peyto’s disciplined approach to debt and cost control helps it ride out the cycles more smoothly than some of its peers.
Of course, no investment is risk-free. Peyto’s business is tied closely to the price of natural gas. If prices fall sharply, earnings could take a hit. But management has a solid track record of adjusting capital spending and maintaining flexibility when needed. And even during tough times, it has shown a strong commitment to preserving its dividend.
Bottom line
In short, if you’re looking to put $20,000 to work in a way that generates meaningful monthly income, Peyto is worth a close look. With its 6.4% yield, monthly payouts, and reliable operations, it stands out as a solid TSX stock for passive income. That $1,280 a year could go a long way toward covering bills, topping up savings, or simply helping you feel more financially secure. And in times like these, that kind of peace of mind is hard to beat.
