Building a passive or secondary income stream is an effective way to enhance financial stability and preserve your purchasing power amid rising prices. It can also help you in achieving your long-term financial goals faster. In a relatively low-interest-rate environment, investors may consider allocating capital to high-yield, monthly-dividend-paying stocks to generate consistent, reliable cash flow.
For instance, investing $200,000 equally across the following two monthly dividend stocks could generate approximately $1,000 in monthly passive income. With that in mind, let’s take a closer look at these companies and what makes them attractive income opportunities.
SmartCentres Real Estate Investment Trust
Real estate investment trusts (REITs) are mandated to return at least 90% of their taxable income to unitholders, making them attractive options for income-focused investors. With that in mind, my first pick is SmartCentres Real Estate Investment Trust (TSX:SRU.UN).
The REIT owns and operates 197 strategically located properties across Canada, representing approximately 35.6 million square feet of income-producing space. Notably, about 90% of the Canadian population lives within 10 kilometres of at least one of its properties. Its tenant base is also robust, with 95% of tenants having a regional or national presence and roughly 60% providing essential services. Backed by its prime locations and strong tenant mix, SmartCentres reported a healthy 98.6% occupancy rate at the end of the third quarter.
Demand for retail space in Canada remains solid, supported by limited new supply and steady leasing activity, both of which benefit the REIT’s core portfolio. Meanwhile, the Toronto-based REIT is diversifying through its growing self-storage platform, having leased three facilities last year. It plans to open two additional facilities in Quebec this year and another two in British Columbia in 2027. The company is also seeking municipal approvals for a newly acquired self-storage development site in Edmonton, Alberta.
In addition, SmartCentres has a substantial development pipeline of 86.2 million square feet, including 0.8 million square feet currently under construction. Supported by its resilient, retail-focused business model and ongoing expansion initiatives, these growth projects could strengthen earnings over time and enhance the sustainability of its future distributions. Meanwhile, the REIT currently offers a monthly dividend payout of $0.1542/share, yielding 6.9% on a forward basis.
Pizza Pizza Royalty
Another monthly dividend stock I’m bullish on is Pizza Pizza Royalty (TSX:PZA). The company operates an asset-light business model, generating royalty income from franchised restaurants under the Pizza Pizza and Pizza 73 banners. Because it earns royalties based on franchisee sales rather than operating restaurants directly, its financial performance is less exposed to commodity price swings and wage inflation. This structure supports stable, predictable cash flows and enables the company to distribute consistent dividends to shareholders.
Despite the seasonality typical of the restaurant industry, PZA aims to provide steady returns by maintaining equal monthly distributions. Its current monthly payout of $0.0775 per share yields approximately 5.8% on a forward basis.
In its most recently reported third quarter, the company posted a modest 0.1% increase in same-store sales. A 0.3% gain at Pizza Pizza locations was partially offset by a 1.1% decline at Pizza 73. Both brands experienced lower traffic, which management attributed to a challenging economic backdrop, weak consumer spending, and heightened competition. However, the average cheque size increased for both banners, supported by growth in higher-value delivery orders.
Looking ahead, PZA is investing in digital platform enhancements, faster service, and menu innovation to help drive customer traffic. It is also expanding its restaurant network and renovating existing locations. Over time, these initiatives could strengthen same-store sales and overall financial performance, supporting the sustainability of its monthly dividend.
