High inflationary pressures and rapidly rising interest rates have badly affected the consumer spending environment lately. That’s one of the important reasons why the TSX Composite benchmark has shed more than 5% of its value since the end of the first quarter of 2023. As these macroeconomic concerns have taken a toll on the Canadian stock market, investors are looking for ways to protect their investments.
In such a difficult market environment, having a reliable source of monthly passive income can be really helpful. Among all possible ways, investing in quality dividend stocks could be one of the most flexible ways to earn extra monthly cash. This is mainly because you can choose how much you want to invest upfront in monthly paying dividend stocks based on high-risk appetite.
In this article, I’ll highlight one of the best Canadian monthly dividend stocks you can buy now and hold for decades.
A top Canadian monthly dividend stock to hold forever
Before you arrive at your final investment decision, you must carefully analyze the financial growth potential of a company based on its fundamentals. Following this guideline becomes even more important if you’re shortlisting reliable stocks to invest in long term to earn extra monthly cash.
Speaking of strong fundamentals, Northland Power (TSX:NPI) could be a great dividend stock you can consider buying today on the Toronto Stock Exchange. If you don’t know much about it already, it’s a Toronto-headquartered renewable energy and utility company with its current prime focus on offshore wind projects. Based on its 2022 financial figures, the offshore wind segment accounted for roughly half of its total revenue.
Recent stock price movement
After more than doubling in value in 2019 and 2020 combined, the share prices of this monthly-paying Canadian dividend stock have dived by nearly 52%, making NPI stock look undervalued based on its growth potential. At the time of writing, the stock trades at $21.70 per share with a market cap of $5.5 billion after witnessing roughly 42% value erosion in 2023. Besides the ongoing global challenges for renewable power projects, the recent broader market selloff could be blamed for its dismal stock price performance this year.
On the positive side, the recent declines in NPI stock have made its current annualized dividend yield of 5.6% look even more attractive. In simple words, that means if you buy its 500 shares at the current market price with an investment of $10,850, its dividends will help you earn about $50.70 in extra monthly cash.
Strong fundamental outlook
Despite the renewable power industry’s seemingly temporary, ongoing challenges, Northland Power’s long-term financial growth trends still look impressive. To give you a quick idea about that, the company’s revenue grew positively by 78% in five years between 2017 and 2022. Moreover, business expansion and better pricing drove its adjusted annual earnings up by about 307% during these five years.
Overall, Northland’s decades of experience in developing and operating power projects, strong development pipeline, and the fact that it generates most of its revenue under long-term contracts make it a trustworthy Canadian monthly dividend stock to invest in for decades.
