Investing in top dividend stocks is a proven strategy for earning reliable passive income. Further, dividend stocks help diversify portfolio risk and add stability. Thankfully, the TSX has numerous fundamentally strong stocks that pay dependable dividends. However, I’ll restrict myself to Canadian stocks that pay monthly cash.
Against this backdrop, investors could consider shares of Pizza Pizza Royalty (TSX:PZA), SmartCentres Real Estate Investment Trust (TSX:SRU.UN), and NorthWest Healthcare Properties (TSX:NWH.UN). Let’s look at the factors that make these monthly dividend stocks attractive investment options.
Pizza Pizza Royalty
Pizza Pizza Royalty could be a compelling investment for earning monthly cash. Besides offering monthly payouts, the company offers a high yield, which supports my optimistic outlook. The company, which operates quick-service restaurants under the Pizza Pizza and Pizza73 brands, pays a monthly dividend of $0.077 a share. This translates into a high of 7.1% based on its closing price of $13.18 on June 14.
Pizza Pizza remains committed to rewarding its shareholders with higher monthly dividends. It distributes all of its available cash after maintaining reserves. It’s worth noting that it raised its monthly cash dividend three times in 2023, for a cumulative increase of 10.7%.
The company’s financials will likely benefit from its focus on value-oriented menu offerings. Moreover, strengthening its store presence across Canada, food and technology innovation, and continued improvement in customer experience at its restaurants will likely drive its top line, earnings, and dividends.
SmartCentres Real Estate Investment Trust
SmartCentres Real Estate Investment Trust is another monthly dividend stock that should be on your radar. It is one of Canada’s largest fully integrated REITs (real estate investment trusts) and has consistently returned cash to its shareholders. SmartCentres currently pays a monthly dividend of $0.154 per share. Based on its last closing price of $21.99, this translates into a lucrative yield of about 8.4%.
SmartCentres’ resilient portfolio of 193 properties generates strong same-property net operating income to cover its payouts. Further, the higher mix of retail properties drives its occupancy rate and cash flows and adds stability to its financials.
It’s worth highlighting that SmartCentres REIT has an industry-leading occupancy and rent collection rate. Further, the REIT benefits from its top-quality tenant base, including large retailers. In addition, its solid tenant retention rate, lease extensions, and robust leasing activity show solid demand for its retail locations.
In the future, SmartCentres’ solid developmental pipeline, comprising mixed-use properties and a large underutilized land reserve, provide a solid foundation for growth and support its payouts.
NorthWest Healthcare REIT
NorthWest Healthcare Properties is another REIT offering monthly income with a high yield. Northwest has a defensive real estate portfolio of healthcare-focused assets, which enables it to produce solid cash flow in all market conditions. The REIT has a high-quality tenant base backed by government funding, which adds stability to its financials.
It’s worth noting that the persistently high interest rates and elevated debt levels led management to slash its dividend in the recent past. Nonetheless, the company’s fundamentals remain strong, and the REIT is taking measures to deleverage its balance sheet and boost liquidity. Despite the dividend cut, NorthWest Healthcare stock currently offers a monthly payout of $0.03 per share, reflecting a high yield of 7.4%.
The REIT is focused on reducing debt and strengthening its balance sheet by exiting non-core businesses. Further, its high occupancy rate of over 96%, inflation-indexed leases, and long average lease expiry term of about 13.2 years add stability to its operations, positioning it well to enhance shareholder return through monthly dividend payments.
