Are you hoping to earn regular passive income?
If so, you might want to consider monthly pay dividend stocks.
It’s possible to get passive income from dividend stocks of any variety, but most of them pay fairly infrequently (once per quarter, or four times per year). Monthly paying dividend stocks are the exception. They pay their shareholders much more frequently, which can be helpful to those who are using dividend income to cover their daily living expenses.
In this article I will look at two dividend stocks that could be worth buying today — one that was previously a monthly pay stock and one that still is.
Pembina Pipeline (TSX:PPL) is a TSX stock with a 5.85% yield. Its dividend is paid quarterly for the time being; however, it has paid monthly in the past. It’s possible that the management will one day reinstate monthly dividend payments.
A lot of stocks have high yields and monthly payout schedules, so what makes PPL so special?
Put simply, what makes it special is the fact that it is actually doing pretty well as a business. In its most recent quarter, PPL delivered the following:
- $2.69 billion in revenue, up 5.4%
- $243 million in earnings, up 203%
- $947 million in cash from operations, up 35.8%
For the most recent full year, it delivered the following:
- $11.61 billion in revenue, up 34.5%
- $2.97 billion in earnings, up 139%
- $2.92 billion in cash from operations, up 10.5%
So, Pembina Pipeline is a profitable and growing business — exactly the kind of business that can afford to keep paying its dividend. Additionally, the $0.65 quarterly dividend works out to $2.6 per year, and last year’s earnings per share was $5.14, so if next year looks like last year, then the dividend can continue being paid.
It would take about $61,538 invested in PPL stock to get $300 in monthly passive income, assuming the dividend were to return to a monthly schedule. If it does not return to such a schedule, then you can still get $3,600 in annual dividend income from it, which averages out to $300 per month.
First National Financial (TSX:FN) is a monthly stock whose payout is $0.20 per month. That works out to $2.40 per year, providing a 6.29% dividend yield at today’s stock price.
First National is a mortgage lender but not a bank. It raises the money for mortgage underwriting through its own balance sheet assets and through means such as mortgage-backed securities and Canada bonds.
Generally, the tools that First National uses to raise money are much more “long term” than bank deposits are. Banks always need to worry about depositors withdrawing large amounts of money at once. First National doesn’t, because its cash doesn’t come from deposits. That could be thought of as a sort of advantage FN holds over a bank.
How is FN doing as a business? Pretty well. In 2022, it delivered the following:
- $908.5 million in interest revenue, up 14.5%
- $169 million in net interest, up 3.4%
- $3.25 in earnings per share, up 1.5%
Overall, it was a pretty good year. Many businesses actively saw their revenues and earnings decline in 2022, particularly tech companies, which faced a tough macroeconomic climate. FN didn’t grow much last year, but at least it grew, which could not be said for many other companies in the same period. If the company can keep up this level of performance, then its generous dividend should continue being paid. It would take about $57,142 invested in FN stock to get $300 in monthly passive income.