The Bank of Canada has reduced its benchmark interest rate by 275 basis points, from 5% in June 2024 to 2.25%. In this low-interest-rate environment, investors may consider high-yield, monthly-dividend stocks as an effective way to boost passive income. Against this backdrop, let’s examine two reliable stocks that offer attractive monthly dividends.
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NorthWest Healthcare Properties REIT
NorthWest Healthcare Properties REIT (TSX:NWH.UN) owns and operates 167 healthcare properties across eight countries, representing 15.7 million square feet of gross leasable area. Last month, the REIT delivered a strong third-quarter performance, with same-property net operating income rising 4.4% year over year. This growth was driven by inflation-linked rent escalations, capital investments becoming income-producing, and improved recoveries, underscoring the strength of its underlying lease income.
Net income totalled $31.2 million, a sharp turnaround from a net loss of $157.3 million in the same quarter last year. Lower interest expenses and positive fair value adjustments on investment properties and financial instruments more than offset the decline in net operating income stemming from asset dispositions, resulting in a solid improvement in profitability.
Moreover, adjusted funds from operations (AFFO) per unit increased 22.2% to $0.11, while the AFFO payout ratio improved significantly to 85% from 99% a year earlier. The REIT has also strengthened its balance sheet by reducing leverage to 48.4% from 50% at the beginning of the year, primarily by utilizing the net proceeds from asset sales to lower its debt levels. At quarter-end, NorthWest reported a healthy global occupancy rate of 96.9% and a weighted-average lease expiry of 13.4 years.
With an aging population expected to drive sustained demand for healthcare infrastructure and expand the REIT’s addressable market, NorthWest Healthcare appears well-positioned for long-term growth. Given its attractive forward dividend yield of 7%, I believe the REIT is well placed to continue rewarding shareholders in the coming quarters, making it a compelling investment opportunity.
Pizza Pizza Royalty
Another Canadian stock that I believe is an excellent choice for income-focused investors is Pizza Pizza Royalty (TSX: PZA), which operates 694 Pizza Pizza and 100 Pizza 73 restaurants across the country. The company follows an asset-light business model, with all restaurants operated by franchisees. It earns royalty income based on franchisee sales, making its financial performance less sensitive to commodity price volatility and rising labour costs.
PZA aims to return all available cash to shareholders after setting aside reasonable reserves, thereby maximizing shareholders’ returns. It has also adopted a policy of equal monthly dividend payments to smooth shareholder income despite the inherent seasonality in the restaurant industry. Currently, the company pays a monthly dividend of $0.0775 per share, yielding 6% on a forward basis.
In its most recently reported third quarter, the company delivered modest same-store sales growth of 0.1%. However, both Pizza Pizza and Pizza 73 experienced traffic declines during the period, mainly due to a challenging macroeconomic environment and intensifying competition.
Despite these headwinds, PZA is investing in strengthening its digital platforms, improving service speed, and introducing new and innovative menu items to drive customer traffic. In parallel, the company continues to expand its store network and renovate existing locations. Taken together, these initiatives position PZA well to sustain its dividend payments at a healthy level, making it a compelling income stock.
