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Most companies pay dividends quarterly, but there are some quality companies that pay their dividends monthly. One of the benefits most often associated with monthly dividend payers is that they provide a steady stream of income. This is particularly appealing for those in retirement or those who are looking to supplement their income, as they try and keep up with monthly expenses. Although capital appreciation is always a positive, these investors are primarily concerned with the dividend.

Investors should look for quality companies that have low payout ratios and companies whose dividends are covered by cash flows. Investors relying on monthly dividends as income must be extra diligent in their assessment of the sustainability of their investments’ dividends. With that in mind, here are three monthly dividend stocks to add to your portfolio.

Altagas Ltd. (TSX:ALA) has taken a beating, losing 16% year to date (YTD). As a result, its dividend yield has skyrocketed to 9.27%. The company’s juicy yield makes it very attractive to income investors looking for steady income. Altagas is a Canadian dividend aristocrat, having raised dividends for six consecutive years. The company has been unfairly weighed down by its WGL Holdings acquisition. Its payout ratio as a percentage of earnings is deceiving, as they contain many one-time charges related to the acquisition. The company anticipates that the WGL acquisition will support 8-10% dividend growth through 2021.

Enbridge Income Fund Inc. (TSX:ENF) is another company whose recent performance has provided investors with a unique buying opportunity. YTD, the company’s share price has lost 6.79% of its value, and its dividend yield has risen to 8.18%. Enbridge is also a dividend aristocrat, having raised dividends for seven consecutive years. The company posted a fund group payout ratio of 82%, well within its targeted 80-90% range. It anticipates raising cash flow and dividends by 10% through 2020.

First National Financial Corp. (TSX:FN) is Canada’s largest non-bank mortgage lender and largest commercial mortgage lender. This sector has been under pressure due in large part to new mortgage rules, which has shrunk the single-family home market. However, the company has been performing well. It is trading at a ridiculously low price-to-earnings ratio of 7.4, and its dividend yield is now 7.14%. The company has consistently grown earnings and revenues, and its payout ratio is a respectable 54%.

Growing and reliable income

Investors looking to add stable, reliable income would do well to add any of these three companies to their portfolios. All three have a solid track record of raising dividends and have sustainable payout ratios. Likewise, share price weakness has provided investors with a unique opportunity to pick up these quality companies at record yields.

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More reading

• How Much Should You Pay for a Stock?
• Why There’s Room in Your RRSP Portfolio for Both Enbridge Inc. and Altagas Ltd.
• Income Investors: 2 Struggling Stocks With Growing Payouts
• TFSA Investors: 3 Undervalued Dividend Stocks That Pay More Than 5%
• 2 High-Yield Dividend Stocks to Buy in April

Fool contributor Mat Litalien is long Enbridge Income Fund. Altagas is a recommendation of Stock Advisor Canada.

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