While traversing the Toronto Stock Exchange’s listings for potentially overlooked Canadian dividend stocks, I’ve just stumbled upon what could be a hidden monthly payer worth watching.
Small-cap dividend stocks rarely make it onto most Canadian dividend investors’ screens because their lower liquidity and smaller size often make them appear too risky for passive income investment purposes. Yet, Richards Group (TSX: RIC) stock popped up on my radar recently, quietly offering a 4.6% annualized dividend yield that’s paid monthly like an ATM dispensing cash month in and month out.
The Richards Group is far from a flashy newcomer. Established in 1912, the former income fund is a battle-tested business model that has survived depressions and market downturns for more than a century. The company has paid its monthly dividend continuously without missing a single payout since March 2010, the furthest TSX market data freely available. However, income investors face a glaring first question when looking at the stock chart: why has the stock price fallen unabated from its peak of around $84 in October 2020 to roughly $28.90 today, shrinking RIC stock’s market capitalization to around $307 million?
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Why did monthly dividend stock Richards Group fall from pandemic highs?
If you check out Richards Group’s five-year stock chart, you might do a double take. Shares peaked around $84 back in October 2020 and have tumbled down to roughly $28.90 today. So, what caused the slide? During the pandemic, demand for healthcare packaging and personal protective equipment exploded, sending company earnings through the roof. As the world reopened, an inventory destocking cycle and macroeconomic drag hit its legacy packaging lines.
Fast forward to 2026, the Richards Group has widely diversified into high margin healthcare lines through acquisitions. Margins are improving, but the legacy food, beverage, and cosmetics packaging sales still dropped over 14% in the first half of the year due to cyclical macro headwinds.
Overall, revenue growth has returned, somewhat organically but mostly through acquisitions.
A century-old business pivoting on high-margin healthcare
The broader market seems to be completely missing RIC stock’s pivot. Founded in 1912, Richards Group has survived the Great Depression, the 2008–09 Global Financial Crisis, and dozens of economic cycles by quietly evolving. Formerly known as Richards Packaging Income Fund, the business aggressively diversified into healthcare supplies, which has now grown into its largest segment. Its high-margin Aesthetics division grew sales 49.8% year over year during the first half of this year, while international sales outside Canada and the U.S. expanded to 9% of total revenue.
Richards Group operates mostly as an asset-light designer and distributor rather than a manufacturer, avoiding costly factory overheads. It recently expanded its scope to become a healthcare original equipment manufacturer in aesthetics, a growth strategy that may accelerate expansion into markets beyond North America.
Is the monthly dividend stock safe for income investors?
This is a big question. Whenever a dividend yield rises due to a stock price decline, you have to ask if the payout is actually sustainable, and if the stock won’t keep sliding to erode the gains from the earned dividend.
In Richards Group’s case, the dividend appears adequately covered by profits, with an earnings payout rate of 54%. Only half of the business’s generated profits are shared with investors. Further, free cash flow generation remains very strong. Free cash flow momentum increased recently thanks to tariff refunds easing margin pressures. The dry powder should help sustain an acquisitions growth strategy, and to pay down debt in the future.
Management is so confident in the business’s future cash flow that it spent cash repurchasing over 770,000 shares at an average price of $28.50 during the second quarter. Stock repurchases usually support management’s opinion that equity in the business is grossly undervalued on the stock market.
Time to buy?
Trading at a forward P/E of just 8.6 and a forward price-earnings-to-growth (PEG) ratio of 0.8, Richards Group stock appears priced like a dying packaging supplier rather than an increasingly thriving healthcare distributor. Investors looking to bet on a successful turnaround, and to earn monthly paycheck while waiting, may scoop up this bargain-priced monthly dividend stock before the market catches on.
