How to Earn $500 a Month With Dividend Stocks in Canada

The Bank of Canada has cut interest rates seven times since June last year, while lowering its benchmark interest rate to 2.75% from 5%. Moreover, analysts predict two additional 25-basis-point rate cuts this year. Amid falling interest rates, investors should consider monthly-paying Canadian dividend stocks that offer higher yields to earn stable and predictable cash flows.

Meanwhile, an investment of $93,000 in the following three monthly dividend-paying stocks can generate over $512 every month. Investors can also avoid paying taxes on their earnings by making these investments through their TFSA (Tax-Free Savings Account). Now, let’s look at these three stocks.

SmartCentres Real Estate Investment Trust

SmartCentres Real Estate Investment Trust (TSX:SRU.UN) owns and operates 196 strategically located properties, with a total gross leasable area of 35.4 million square feet. Given its diversified portfolio of mixed-use properties and solid tenant base, the Toronto-based REIT enjoys a healthy occupancy rate. Additionally, the growing demand for existing space and strong retention have supported the same property net operating income growth, which rose 4.1% in the recently reported first-quarter earnings.

Moreover, SmartCentres REIT has a solid development pipeline with municipal approvals for the development of 59.1 million square feet of mixed-use properties. Meanwhile, one million square feet of properties are under construction. Along with these expansions, the lease-up and renewal activities could support its financial growth in the coming years, thereby enabling it to pay dividends at a healthy rate. It currently offers a monthly dividend of $0.1542/share, translating into an attractive forward dividend yield of 7.28% as of the July 29th closing price. It trades at an attractive NTM (next-12-month) price-to-earnings multiple of 19.5, making it an ideal buy for income-seeking investors.

Whitecap Resources

Second on my list is Whitecap Resources (TSX:WCP), which had reported an impressive second-quarter performance last week. During the quarter, the company completed the strategic combination with Veren, thereby becoming Canada’s seventh-largest oil and natural gas producer. Meanwhile, the company’s total average production stood at 292,754 BOE/d (barrels of oil equivalent per day) during the quarter, representing a 5% per share increase from the corresponding quarter of the previous year.

Furthermore, the company generated $713 million in cash flows, representing a 6% year-over-year increase per share from the previous year. After deducting $409 million for capital investments, its free cash flow stood at $304 million for the quarter. With a net debt of $3.3 billion, the company’s net debt-to-annualized funds flow ratio stands at 1. Moreover, the company has an unutilized debt capacity of $1.6 billion, allowing it the financial flexibility to navigate a challenging macroeconomic environment. The company’s management also targets an organic production growth of 3-5% per share in the long term.

Considering its solid performance, healthy financial position, and high growth prospects, I believe WCP is well-equipped to continue paying dividends at a healthier rate in the coming years. Its current monthly payout of $0.0608/share translates into a forward dividend yield of 6.79%.

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) is another monthly-paying dividend stock that I am bullish on due to its asset-light business model, reliable cash flows, and high yield dividends. It operates 697 Pizza Pizza restaurants and 100 Pizza 73 restaurants through its franchises, collecting royalty from them based on their sales. Therefore, its financials are less prone to rising commodity prices and labour expenses.

Additionally, the company intends to distribute all the available cash among its investors. But, given the seasonal variations inherent in the restaurant industry, and to smooth out its monthly dividend payouts, the company makes provisions for certain reserves. Currently, it pays a monthly dividend of $0.0775/share, translating into a forward dividend yield of 5.77%.

Moreover, PZA has planned to increase its traditional restaurant count by 2-3% this year. Along with these expansions, the company is focusing on offering exciting menu offerings at a great value, brand messaging, and renovating old restaurants, which could boost its same-store sales. Given its healthy growth prospects and stable cash flows, I believe PZA’s future dividend payouts are safer.