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Monthly Cash Kings: 3 Canadian Stocks That Pay Back 12 Times a Year

Christopher Liew, CFA
·4 min read
Payday ringed on a calendar
Image source: Getty Images

Written by Christopher Liew, CFA at The Motley Fool Canada

The talk that “not all dividend stocks are created equal” is also true in the context of payout frequency. Most firms that share a portion of their profits pay quarterly dividends. However, if you prefer Canadian stocks that pay back 12 times a year, invest in monthly cash kings.

Freehold Royalties (TSX:FRU), Chartwell Retirement Residences (TSX:CSH.UN), or Boston Pizza Royalties Income Fund (TSX:BPF.UN) trades at less than $20 per share, but the average dividend yield is 7.14%. You can reinvest the dividends every month for faster compounding of your principal.

Lower-risk returns

Freehold Royalties isn’t your typical oil & gas producer that pays hefty dividends. The $2 billion company pays dividends from a high-netback portfolio of mineral titles and royalties on oil and gas properties across North America.

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The diverse, long-duration asset base enables Freehold to generate robust cash flows at various commodity prices. Oil and natural gas liquids comprise 63% of production volumes, while 37% comes from natural gas. The portfolio in Canada and America contributes 57% and 43% to total revenues, respectively.

The well-capitalized oil producers doing business with Freehold include Canadian Natural Resources, Vermilion Energy, ConocoPhillips, and ExxonMobil. Management said the 779 gross wells drilled on North American royalty lands in the first nine months of 2023 was the highest level of gross drilling activity through the first three quarters in Freehold’s 27-year history.

At $13.62 per share, the dividend offer is a juicy 7.93%. Freehold aims to provide investors with lower-risk returns and long-term growth. The quality assets and business model assure sustainable dividends.

Accelerating occupancy and earnings

Chartwell is a good source of monthly dividend income. This $2.56 billion company serves Canadian seniors and provides them with housing communities, whether independent living, assisted living or long-term care. The occupancy rate suffered because of COVID-19 but has steadily increased every month from April 2022 (79.1%) to January 2024 (85.5%).

In the first three months of 2023, resident revenue increased 3% year over year, while net income soared 6,740% to $141.44 million from a year ago. Its chief executive officer (CEO), Vlad Volodarski, noted the accelerating occupancy and earnings growth. He added the asset management projects will reposition the property portfolio toward high growth, improve financial flexibility, and build a solid foundation for future growth.

Suppose you invest today, CSH.UN pays a lucrative 5.5% dividend.

Pure dividend play

Boston Pizza on the TSX refers to the $327.5 million company that owns trademarks used by Boston Pizza International or the popular casual dining brand. At $15.39 per share, you can partake in the mouth-watering 8.34% dividend. This restaurant stock is a pure dividend play, so don’t expect much on price appreciation.

Is the business profitable? Yes, but income dropped below $10 million in 2020 due to the pandemic-induced lockdowns. However, the average net income in 2021 and 2022 was $33.99 million. In the first nine months of 2023, total revenue and net income rose 11% and 1% year over year to $37.1 million and $24.3 million, respectively.

Excellent options

Freehold, Chartwell, and Boston Pizza may not be the anchor stocks in an investment portfolio. However, they are excellent options for income-oriented investors looking for monthly dividend income.

The post Monthly Cash Kings: 3 Canadian Stocks That Pay Back 12 Times a Year appeared first on The Motley Fool Canada.

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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources, Freehold Royalties, and Vermilion Energy. The Motley Fool has a disclosure policy.

2024