We maintain an ongoing list of all monthly dividend payers — and in this article we begin a 5-part series on the best current buys among these stocks, explains Bob Ciura, contributing editor with Sure Dividend.
High-yielding monthly dividend payers have a unique mix of characteristics that make them especially suitable for investors seeking current income.
Our current top 5 monthly dividend stocks were selected based on their projected total annual returns over the next five years, but also based on a qualitative assessment of business model strength, future growth potential, and dividend sustainability.
TransAlta Renewables (Toronto: RNW) (OTC: TRSWF) — our #5 monthly dividend stock — has a history in renewable power generation that goes back more than 100 years. In 2013, the company was spun off from TransAlta, who remains a major shareholder in the alternative power generation company.
The company has maintained or increased its dividend every year since 2014, by an average of 4% growth per year. TransAlta Renewables owns 13 hydro facilities, 23 wind farms, 7 natural gas plants, 1 battery asset and 1 solar asset.
In total, the company owns directly or through economic interests, an aggregate of over 2,500 megawatts of gross generating capacity in operation.
TransAlta earns a place on the list of top monthly dividend stocks, not just because of its high yield, but also because of its future growth potential. TransAlta stands on the forefront of a major growth theme–renewable energy.
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2019 was another year of growth for the company. Full year Comparable EBITDA increased $8 million, to $438 million for 2019, mainly due to the inclusion of a full year of results from the Lakeswind wind farm and the Mass Solar facility.
Future growth is likely due to the addition of new projects. For example, TransAlta announced that the Big Level and the Antrim wind farms began commercial operation in December 2019.
The company also has performed well to start 2020, especially given the difficult business conditions due to coronavirus. In the 2020 third quarter, revenue increased 6.7% year-over-year, while renewable energy production (GWh) increased to 864 from 706, in the same quarter a year ago.
The main drivers of higher comparable EBITDA were improved performance at US Wind farms,Canadian Wind, US Wind and Solar and Australian Gas.
TransAlta pays a monthly dividend of $0.0783 per share in Canadian dollars. In terms of U.S. dollars, the annualized dividend payout of $0.74 per share represents a strong yield of 4.3%.
TransAlta is therefore an appealing mix of dividend yield and future growth potential. The dividend appears secure, as the company has a strong financial position.
