Dividend investors: 2 monthly income stocks with a yield greater than 5.5%
Some dividend investors prefer monthly rather than quarterly payments. However, the typical periodic payment for most dividend payers is quarterly. On the TSX, a little over 20 companies have a slight advantage over the others since they pay dividends every month.
If you want more frequent investment income, consider Extendicare (TSX: EXE) and Foreign exchange income (TSX: FEI). Other than 12 payments per year, dividend yields are over 5.5%. The benefit to you is a faster rate of capital growth because you can reinvest dividends more regularly, not just four times a year.
Pure dividend game
Extendicare belongs to the healthcare sector and is an important name in the healthcare facility industry. The $ 776.5 million company provides long-term care (LTC), retirement services and home health care. In the first quarter of 2020 (quarter ended March 31, 2021), the Extendicare and Esprit Lifestyle Communities divisions owned and operated 58 LTC homes and 11 retirement communities.
Extendicare Assist has provided contractual services to 51 LTC homes and retirement communities on behalf of third parties. The most recent quarterly results were much better than the first quarter of 2020. Revenue increased 18.6%, while net profit jumped 40.92%. Despite the positive numbers, the average occupancy rate of LTC homes was only 82.9% from the peak of 97.0% in the first quarter of 2020.
Fortunately, Extendicare has base tenure protection funding for all LTC homes through August 31, 2021, from the Ontario government. The company once again expects a mild occupancy in winter. On the stock market, the health sector has shown resilience with 34.84% since the start of the year. At $ 8.67 per share, Extendicare pays a dividend 5.54% above average.
Robust industrial stock
Exchange Income (EIC) operates in the aviation and aerospace industries. It has 15 subsidiaries whose activities range from medical evacuation transport services and aviation spare parts to the construction of communication towers. Others are moving into high pressure water cleaning systems and precision metal fabrication, among others.
The main strength of this $ 1.51 billion Winnipeg company is effective diversification. Management says EIC can withstand economic cycles as the companies that provide products and services are found in various industries, businesses and regions. The scope is North America and internationally.
The past year has been difficult, although business recovered in the first quarter of 2021 (the three months ending March 31, 2021). Adjusted net profit and free cash flow increased by 412.68% and 4.7% compared to the first quarter of 2020. Sales decreased slightly by 2.03%. A notable highlight during the quarter was that net debt only increased by $ 4 million.
According to Mike Pyle, CEO of EIC, the company’s net debt has grown by about $ 40 million in the first quarter over the past 10 years. Management’s focus on managing cash flow and reducing maintenance capital expenditures is the reason cash usage did not increase in the first quarter of 2021.
The current EIC share price is $ 39.90, while the dividend yield is 5.65%. In addition, industrial stock is up 12.12% since the start of the year. Plus, the price is near its 52-week high of $ 41.95. According to analysts’ forecasts, it could climb further to $ 53. The total return on investment would be the dividends plus the capital gain.
Generous monthly payments
The average dividend yield of Extendicare and Exchange Income is 5.5595%. Assuming you invested $ 15,000 in each business, the monthly income stream would be $ 139.88. If you plan to reinvest the dividends and hold the shares for 15 years, the value of the investment will be $ 67,884.65.
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Foolish contributor Christopher Liew has no position on the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.