Here Are 2 Monthly Dividend Stocks I'd Buy for My TFSA

Here Are 2 Monthly Dividend Stocks I’d Buy for My TFSA

If you like dividends hitting your TFSA every month, these two Canadian stocks are quintessential for a passive-income portfolio.

Robin Brown

Author Bio

Robin Brown has been a regular contributor to The Motley Fool Canada since January 2020. He began investing in 2009, during the depths of the global financial crisis, and has continued to refine his approach over the years. His investment philosophy emphasizes patience, quality, and identifying businesses with the potential to create lasting value. Robin currently lives in St. Albert, Alberta, where he manages a portfolio of Western Canadian industrial properties and private investments. Having lived in Canada, Norway, and Australia, he brings a broad perspective to his work and investing. Outside of work, Robin enjoys traveling, hiking, hunting, fishing, biking, and cooking for his wife, two daughters, and son.

Education

Bachelor's degree in Theology
Advanced Diploma in Business Management

Areas of Expertise

Dividend investing, value investing, quality stocks, small-cap stocks, long-term investing, business fundamentals, balance sheet analysis, capital allocation, industrial real estate, and private investments.

Social Media Profiles

Favorite Investment Quote

"Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down." — Warren Buffett

Published August 16, 9:15 am EDT

Canada has a robust mix of dividend stocks to choose from. You can build an investment portfolio full of dividend stocks from a wide mix of sectors and industries. Most dividend stocks pay their dividends on a quarterly basis. However, there are a select few stocks that pay dividends monthly.

If you are looking for monthly pay cheques to hit your Tax-Free Savings Account (TFSA), here are two interesting dividend stocks to choose from.

Partially complete jigsaw puzzle with scattered missing pieces — Source: Getty Images

Granite: A solid REIT stock for monthly dividends

Granite Real Estate Investment Trust (TSX: GRT.UN) is the perfect anchor for a dividend portfolio. Being a REIT (real estate investment trust), it collects rents monthly. It must pay out most of that income back to unitholders every month.

Like its name, Granite has very solid foundations. It owns 139 logistics and manufacturing properties across Canada, the United States, and Europe. These are modern, well-located facilities with credit-grade tenants and strong occupancy (over 98%). The REIT has an average lease term of over five years, so its cash flows are predictable.

It just delivered a quarter where funds from operations (FFO) per unit increased by 12%. Its payout ratio is sitting at 70%, which means it still generates ample cash flow after paying its distribution. The REIT has a sector-leading balance sheet that has enabled ample flexibility for acquisitions and opportunistic unit buybacks.

Granite has increased its distribution for 15 consecutive years. Today, after a recent stock pullback, it yields 3.9%. If it hits a 4% yield, it would be a very attractive buying opportunity. If you want a distribution that you don’t have to worry about, this is a great monthly dividend stock to hold long-term.

Chartwell: A top stock for growth and dividend income

Another way to get real estate exposure, but from a totally different sector, is Chartwell Retirement Residences (TSX: CSH.UN). With over 26,000 suites, this is the largest retirement community operator in Canada.

It is a best-in-class operator and has a leading brand across the country. When people are looking to downsize, Chartwell is a top option with its mix of care, lifestyle, and community options.

Canada’s population has been aging, and there is a surging wave of demand. Unfortunately, there is just not enough retirement space being built to meet that demand. Consequently, Chartwell has a massive tailwind for occupancy and rental rate growth in the coming years.

It just delivered a strong quarter where FFO per unit increased by 16.7%. Occupancy is sitting in a sweet spot at 95%. Chartwell has been smartly recycling its portfolio by selling off mature assets and acquiring assets with more rental growth potential.

This dividend stock yields 2.9% today. Chartwell just increased its dividend this year for the first time since 2020. Prior to COVID-19, it had a record of growing its distribution annually. With a payout ratio of only 56%, it certainly looks well equipped to grow its dividend regularly in the future.

The Foolish takeaway

Real estate is a great place to look for monthly distributions/dividends. Both Granite and Chartwell are exceptionally well-managed REITs. For a mix of modest growth and reliable income, they are great stock picks to buy on any pullback.