A 6% Dividend Stock Paying Out Monthly

Peyto Exploration and Development Corp. (TSX:PEY) is one of Canada’s lowest-cost natural gas producers. It’s also a dividend stock that’s yielding a juicy 6% and paying out monthly.

Natural gas is in the midst of a supercycle driven by rising liquified natural gas (LNG) demand and a boom in data centre demand. North America’s natural gas is cheap, secure, and abundant. And the world is paying attention.

Why natural gas?

A cyclical natural gas producer is not where I would typically turn for dividend income. But these are different times and Peyto Exploration is different. Let me explain.

A secular trend is a long-term trend that develops over a long period. It’s a trend that’s supported by shifts in the economy or business climate – a trend that has staying power. We are currently living through significant structural changes to the natural gas market. A secular trend that is being driven by the LNG industry and local demand, which is coming from sources such as utilities and data centres.

Within this environment, we have Peyto. Peyto is a Canadian natural gas producer that operates in the very lucrative deep basin of Alberta. These top-quality assets have afforded Peyto with long-life and low-cost reserves. In fact, Peyto is currently one of the lowest-cost natural gas producers. This profile has provided Peyto with consistently resilient results, largely regardless of the North American natural gas pricing environment.

Peyto – A review of recent results

In order to illustrate this, let’s take a look at Peyto’s most recent quarterly results. Peyto’s first quarter of 2026 was one that broke records on production, earnings, and cash flow. Production increased 10%, earnings per share (EPS) increased 44% to $0.82, and funds from operations increased significantly to $293 million.

The company continues to drive down costs, hedge its production, and diversify its market exposure, with meaningful exposure to higher-priced LNG markets. While North American natural gas prices remain subdued, Peyto is increasingly directing its natural gas to the most value-added, lucrative markets.

Valuation

Peyto trades at a mere 5.7 times cash flow and 1.7 times book value. This is low relative to its peers but also relative to the quality of Peyto’s business. For example, Peyto’s return on equity, or ROE, is just above 17%, and its operating margin is almost 40%. These are great numbers for any business. But they’re phenomenal for a cyclical natural gas producer. This is testament to the fact that Peyto runs a tight and operationally sound business.

The bottom line

Peyto stock has quite a few things going for it. The first is its well-supported dividend yield of almost 6%. The second is the company’s top-notch assets and low-cost business, which makes it very resilient in the face of even depressed North American natural gas prices. Finally, Peyto is operating at a time when the natural gas industry is looking forward to booming demand due to the once-in-a-lifetime structural shifts taking place.

All of this makes Peyto a top monthly dividend stock to buy today.

The post A 6% Dividend Stock Paying Out Monthly appeared first on The Motley Fool Canada.

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Fool contributor Karen Thomas has positions in Peyto Exploration & Development. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.