High inflation is a thorn to everyone, but with the Bank of Canada extending the timeline to hit its 2% target by mid-2025, the worst is yet to come. Expect another rate hike after the pause this month. Governor Tiff Macklem himself said interest rates may not be high enough.
People looking to hedge against inflation or minimize its impact can consider dividend investing. This overlooked strategy is one way to offset the damage and preserve your purchasing power. Moreover, it would help to receive extra income streams monthly during inflationary periods.
Most TSX-listed companies pay monthly dividends but some Canadian dividend stocks pay cash monthly. The top picks are Chartwell Retirement Residences (TSX:CSH.UN), Dream Industrial (TSX:DIR.UN), and Pizza Pizza Royalty Corp. (TSX:PZA). Besides the high yields and low prices, the three stocks outperform the broader market year to date.
Embedded potential value
Real estate experts expect demand for healthcare facilities to increase in the post-pandemic world. Chartwell boasts a strong franchise in retirement residences, and the business is nearing full recovery from COVID-19 (79% occupancy rate). At $10.07 per share, current investors delight in the 24.6% year-to-date gain in addition to the 6.08% dividend.
The $2.4 billion real estate investment trust (REIT) owns and operates housing communities for seniors, including services like independent or assisted living and long-term care (LTC). In the first half of 2023, resident revenue rose 3.8% year over year to $334 million, although net loss ballooned to $16.7 million from $2.2 million.
Nevertheless, its CEO, Vlad Volodarski, said, “There is significant embedded potential value in our portfolio. We are committed to realizing it through our operating initiatives and numerous portfolio optimization strategies underway.”
Double-digit organic growth
Dream Industrial, from another real estate sub-sector, continues to experience strong leasing momentum and enjoy attractive rental spreads.The $3.8 billion REIT owns and operates sought-after industrial properties (321 assets) in Canada, Europe, and the United States.
Its President and CEO, Alexander Sannikov, said, “Our high-quality portfolio continues to produce double-digit organic net operating income (NOI) growth with a strong runway for further growth.” He adds that the growing private capital partnerships, development and value-added projects enhance the overall business.
In the first half of 2023, net rental income and NOI climbed 22.7% and 12.3% year-over-year respectively to $151.68 million and $164.49 million. Besides the high 98% occupancy rate, the average weighted lease term is 4.4 years.
Solid results post-pandemic
Dividend earners can’t pass up on the mouth-watering dividends of Pizza Pizza. At $14.18 per share (+8.28% year to date), the dividend offer is 6.35%. A $14,180 investment (1,000 shares) can transform into a $75.04 monthly passive income. Collect the dividends and keep the principal intact.
The $458.6 million corporation collect royalties from the Pizza Pizza and Pizza 73 restaurants in the royalty pool. In Q2 2023, system sales and royalty income increased 11.2% and 10.9% respectively to $158.5 million and $10.1 million versus Q2 2022.
Because of the strong financial results and exceptional sales growth, Pizza Pizza raised the monthly dividends twice in the first half of 2023 by 7.1% (3.6% in Q1 and 3.5% in Q2).
Inflation fighters
Chartwell, Dream Industrial, and Pizza Pizza are not immune from industry headwinds and market pullbacks. However, their consistent monthly cash dividends give investors inflation-fighting powers.
