Monthly paying dividend stocks are ideal for investors looking for consistent passive income in this low-interest-rate environment. Therefore, let’s look at three Canadian companies that offer monthly payouts with dividend yields over 5%.
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Northland Power
Northland Power (TSX: NPI) has an economic interest in several power-producing facilities, with a combined capacity of 3.5 gigawatts. It sells most of the power produced from its facilities through long-term PPAs (power-purchase agreements), with the weighted average revenue life of these contracts standing at around 15 years. Therefore, the company’s financials are less prone to volatile market conditions. Supported by these stable and reliable financials, the company has been paying dividends every month since 2018 and currently offers an attractive yield of 5.43%.
Further, NPI has 10 gigawatts of projects in the developmental pipeline, with 2.2 gigawatts of projects under construction. Amid these growth initiatives, the company’s management predicts its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to grow to $1.6-$1.8 billion by 2027, representing an annualized growth of 7-10%. Additionally, the company’s valuation also looks reasonable, with its NTM (next-12-month) price-to-earnings ratio currently standing at 13.8.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) is another monthly paying dividend stock that I am bullish on due to its stable cash flows from an asset-light business model. It operates Pizza Pizza and Pizza 73 brand restaurants through franchisees and collects royalties from them based on their sales. Therefore, its financials are less prone to fluctuations in commodity prices and wage increases. Despite seasonal variations that are inherent to the restaurant industry, the company has adopted a policy to make equal monthly payouts to smooth out investors’ returns. Its current monthly dividend payout of $0.0775/share translates into a forward dividend yield of 5.72%.
Moreover, PZA posted a healthy second-quarter performance, with its same-store sales increasing by 2.1% despite the headwinds in the quick-service restaurant industry. Its menu innovations and strategic sports partnerships drove its transactions and check size, thereby driving its same-store sales. Further, the company is hoping to increase its traditional restaurant count by 2-3% and is continuing with its restaurant renovation program. Considering all these factors, I expect PZA’s royalty income to grow in the coming quarter, thereby allowing it to continue rewarding its shareholders with high yield.
SmartCentres Real Estate Investment Trust
My final pick is SmartCentres Real Estate Investment Trust (TSX: SRU.UN), which owns and operates 197 strategically located properties across Canada. It leased 147,818 square feet of space during the quarter, improving its occupancy rate to 98.6%. Additionally, its improving customer traffic and solid tenant base led its same properties’ NOI (net operating income) to grow 4.8% during the quarter. The company also extended or finalized 82.1% of all leases that are maturing this year, with a rental growth of 8.5%. Amid these solid operating performances, its adjusted AFFO (adjusted funds from operations) per unit grew 17% to $0.55.
Moreover, SmartCentres has a solid developmental pipeline with 58.9 million square feet of developmental approvals, with 0.8 million square feet currently under construction. Along with these asset base expansions, the lease-up and renewal activities could support its financial growth in the coming quarters. Therefore, I expect the Toronto-based REIT to continue rewarding its shareholders with healthy dividends. Its current monthly payout of $0.1542/share translates into a forward dividend yield of 6.88%.
