A 6% Dividend Stock Paying Out Monthly

Here’s why you should consider Peyto Exploration and Development as your high-yield monthly dividend payor.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published July 16, 4:30 pm EDT

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Key Points

Peyto Exploration yields a juicy 5.96% paid monthly and is one of Canada's lowest-cost natural gas producers operating in Alberta's deep basin, positioned to benefit from a natural gas super cycle driven by rising LNG demand and booming data centre growth.
Q1 2026 results broke records with production up 10%, EPS up 44% to $0.82, and funds from operations surging to $293 million, as Peyto continues driving down costs while diversifying market exposure to higher-value LNG markets despite subdued North American natural gas prices.&lt;/p>
Trading at just 5.7 times cash flow and 1.7 times book value with a phenomenal 17% ROE and nearly 40% operating margin, Peyto's low valuation reflects a well-supported 6% dividend backed by top-notch assets and resilient operations during once-in-a-lifetime structural shifts in the natural gas industry.

Peyto Exploration and Development Corp. (TSX:PEY) is one of Canada’s lowest-cost natural gas producers. It’s also a dividend stock that’s yielding a juicy 6% and paying out monthly.

Natural gas is in the midst of a supercycle driven by rising liquified natural gas (LNG) demand and a boom in data centre demand. North America’s natural gas is cheap, secure, and abundant. And the world is paying attention.

monthly calendar with clock — Source: Getty Images

Why natural gas?

A cyclical natural gas producer is not where I would typically turn for dividend income. But these are different times and Peyto Exploration is different. Let me explain.

A secular trend is a long-term trend that develops over a long period. It’s a trend that’s supported by shifts in the economy or business climate – a trend that has staying power. We are currently living through significant structural changes to the natural gas market. A secular trend that is being driven by the LNG industry and local demand, which is coming from sources such as utilities and data centres.

Within this environment, we have Peyto. Peyto is a Canadian natural gas producer that operates in the very lucrative deep basin of Alberta. These top-quality assets have afforded Peyto with long-life and low-cost reserves. In fact, Peyto is currently one of the lowest-cost natural gas producers. This profile has provided Peyto with consistently resilient results, largely regardless of the North American natural gas pricing environment.

Peyto – A review of recent results

In order to illustrate this, let’s take a look at Peyto’s most recent quarterly results. Peyto’s first quarter of 2026 was one that broke records on production, earnings, and cash flow. Production increased 10%, earnings per share (EPS) increased 44% to $0.82, and funds from operations increased significantly to $293 million.

The company continues to drive down costs, hedge its production, and diversify its market exposure, with meaningful exposure to higher-priced LNG markets. While North American natural gas prices remain subdued, Peyto is increasingly directing its natural gas to the most value-added, lucrative markets.

Valuation

Peyto trades at a mere 5.7 times cash flow and 1.7 times book value. This is low relative to its peers but also relative to the quality of Peyto’s business. For example, Peyto’s return on equity, or ROE, is just above 17%, and its operating margin is almost 40%. These are great numbers for any business. But they’re phenomenal for a cyclical natural gas producer. This is testament to the fact that Peyto runs a tight and operationally sound business.

The bottom line

Peyto stock has quite a few things going for it. The first is its well-supported dividend yield of almost 6%. The second is the company’s top-notch assets and low-cost business, which makes it very resilient in the face of even depressed North American natural gas prices. Finally, Peyto is operating at a time when the natural gas industry is looking forward to booming demand due to the once-in-a-lifetime structural shifts taking place.

All of this makes Peyto a top monthly dividend stock to buy today.