2 Affordable Passive-Income Stocks That Pay Monthly

Given their stable cash flows, healthy dividend yields, and attractive valuation, these two dividend stocks could boost your passive income.

| More on:

On Wednesday, the Bureau of Labor Statistics stated that the United States consumer prices index rose 3% in June, lower than analysts’ expectations of 3.1%. Moreover, it was the lowest increase since March 2021. Despite the signs of easing inflation, analysts are projecting the Federal Reserve of the United States to increase interest rates one more time. Higher interest rates could deter economic growth, thus hurting equity markets.

Given the uncertain outlook, investors can buy the following two monthly paying dividend stocks to earn a stable passive income.

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX:PZA) is a Canadian-based company that operates Pizza Pizza and Pizza 73 brand restaurants. It has adopted a highly franchised business model, with most restaurants operated through franchisees. The company collects royalties from these franchisees based on their sales. So, rising prices and wage inflation will not hurt its financials. Meanwhile, increasing menu prices to compensate for rising prices could boost its royalty income.

In the recently reported first-quarter performance, Pizza Pizza Royalty’s royalty income grew by 15.3% amid same-store sales growth of 13.6% and a net addition of 18 restaurants. Increased consumer visits and average cheque size drove the company’s same-store sales growth. Reopening of non-traditional restaurants, value messaging, and promotional activities drove traffic. Supported by its strong performances over the last few quarters, the company has raised its dividends seven times since April 2020. Meanwhile, the company currently pays a monthly dividend of $0.075/share, translating its dividend yield to 6.06%.

Notably, the uptrend in the company’s financials will continue. The popular pizza chain plans to increase its restaurant count by 3-4% this year. Adding new restaurants and positive same-store sales growth could grow its royalty income, thus allowing it to continue paying dividends at a healthier rate. Besides, it trades at an attractive NTM price-to-sales multiple of 0.8, making it an attractive buy for income-seeking investors.

Northland Power

Second on my list would be Northland Power (TSX:NPI), which develops and operates clean energy infrastructure worldwide. It currently owns or has an interest in power-generating facilities with a total production capacity of 3 gigawatts. The company has been under pressure this year, losing over 26% of its stock value. The increase in operating expenses amid an inflationary environment, weak quarterly performances, and rising interest rates appear to have dragged the company’s stock price down. Amid the pullback, the company trades at 1.6 times its book value, which looks attractive.

Despite the near-term volatility, the renewable energy sector offers excellent growth prospects. McKinsey projects global electricity generation from solar and on- and off-shore wind projects to triple between 2021 and 2030, thus expanding the addressable market for Northland Power.

Meanwhile, the company has a well-diversified 20 gigawatts in the project pipeline. Of these projects, 60% are off-shore, 25% solar, 5% on-shore, and 10% others. Besides, 40% of these projects are in Europe, 30% in North America, 25% in Asia, and 5% in Latin America. These diversified projects could boost the company’s financials in the coming years. Besides, the company is evaluating its asset portfolio and divesting of low profitability assets, which could strengthen its financial position.

Notably, Northland Power has been paying dividends uninterruptedly since 1998. It currently pays a monthly dividend of $0.10/share, with its yield at 4.48%. Considering all these factors, I believe Northland Power would be an ideal buy to boost your passive income.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »