Getting paid every month instead of every quarter has real appeal. A monthly dividend can smooth out cash flow and make reinvesting easier to track. For retirees or anyone building a passive income stream, a predictable monthly payout matters just as much as the size of the payout.
Two Calgary-based energy stocks with a monthly dividend should be part of your income watchlist given volatile oil prices and supply disruptions.
Both reported quarterly results this year, resulting in rising cash flow, lower debt, and robust management guidance. Here is a closer look at each one, and why they stand out among monthly dividend stocks in Canada right now.
Peyto Exploration and Development (TSX:PEY) and Freehold Royalties (TSX:FRU) operate in the Deep Basin and broader Western Canadian energy patch.
Both posted quarterly numbers strong enough to support their current distributions, and in Peyto’s case, to justify raising it.
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Peyto Exploration and Development: A TSX dividend stock with a growing payout
In Q1 2026, Peyto reported record production of 148,000 barrels of oil equivalent per day, up 10% from the same period last year.
Funds from operations came in at a record $293 million, or $1.41 per share. Earnings also rose to a record of $171 million, or $0.82 per share, giving the company a 39% profit margin, its best in a decade.
President and CEO Jean-Paul Lachance credited a mix of low costs and strong pricing. Peyto realized $4.69 per thousand cubic feet for its gas, well above the benchmark, driven by hedging gains and exposure to multiple North American markets beyond Alberta.
A strong quarter enabled Peyto to lower debt by $89 million. Since its Repsol acquisition in 2023, the Canadian energy company has reduced debt by $365 million.
With leverage now at a comfortable level, the company raised its monthly dividend by $0.01 per share, a 9% increase, and said it expects to keep paying down debt even after the higher payout.
Lachance also pointed to longer-term demand drivers for natural gas. “We remain constructive for natural gas with the continued LNG build-out in Canada and the U.S. and the increased demand from local markets like power for data centers,” he said.
With roughly $715 million in gas sales already hedged for the rest of 2026 and another $510 million locked in for 2027, Peyto offers near-term cash flow visibility.
Freehold Royalties: A Canadian stock riding stronger oil prices
Rather than drilling wells itself, Freehold collects royalties from roughly 350 operators across Western Canada and the United States, spreading its risk across thousands of producing wells.
The second quarter showed why the model works well in a rising price environment.
- Funds from operations jumped 30% quarter over quarter to $78 million, or $0.47 per share, driven mainly by stronger realized prices.
- Crude oil fetched $122 per barrel for Freehold during the quarter.
- Drilling activity on Freehold’s land picked up sharply, with 300 gross wells drilled companywide, up 35% from the prior quarter.
- Roughly 82% of the U.S. drilling happened in the Permian Basin, an area CEO David Spyker described as central to the company’s growth into 2027.
Freehold used its stronger cash flow to cut net debt by $24 million to $251 million, bringing its debt-to-trailing funds from operations ratio down to a healthy 1 times.
Dividends paid out totalled $44 million, a payout ratio of 57%, leaving meaningful room for the company to keep investing in new royalty acreage while still rewarding shareholders every month.
The bottom line on monthly dividend TSX stocks
Both Peyto and Freehold Royalties enter the second half of 2026 with lower debt, rising cash flow, and monthly dividends that look well supported by their own numbers.
Peyto offers direct exposure to natural gas with a management team actively growing the payout, while Freehold offers diversified, lower-risk exposure to both oil and gas through its royalty model.
For Canadian investors building a monthly dividend stock portfolio, both names are worth a closer look.
