Buy This 5.7% Monthly Dividend Stock Today and Hold Forever for Passive Income

Dividend stocks can be an excellent part of any long-term financial strategy, whether you’re planning to make a big-ticket purchase down the line or as part of your retirement plan. The right dividend stocks offer regular income through monthly or quarterly distributions. The best ones also increase payouts to ensure investors generate a passive income that keeps pace with or even beats inflation.

Finding the right dividend stocks to align with your long-term financial goals is not as easy as investing in the first one that you come across. If you seek a dividend stock that provides monthly distributions and can increase payouts, Peyto Exploration and Development (TSX:PEY) can be a good holding to consider.

Today, I will discuss why this TSX energy stock can become a vital part of your portfolio.

Lucrative business model

Peyto is a $4.6 billion market-cap oil and gas company headquartered in Calgary. The primary focus for the business is in the exploration and development of natural gas. The company operates in the deep basin of Alberta, a region full of low-cost and long-life reserves. Its focus on this area also makes Peyto among Canada’s lowest-cost natural gas-producing companies. This helps the company keep production levels high while keeping costs under control.

The traditional energy sector is changing and there will come a point where gasoline and diesel might no longer be in use. However, the natural gas industry is a different thing altogether. The essential hydrocarbon will come in handy for decades into the future. In fact, natural gas is rapidly replacing coal for energy producers due to the lower pollutants it releases into the atmosphere.

Canadian natural gas is also seen as desirable around the world, especially since it is sourced from a politically stable region, there is plenty of it, and it is cheap.

Solid business

Natural gas accounts for around 90% of the total production by Peyto. Its lower exposure to crude oil means it has a degree of insulation from volatile commodity prices. Canadian natural gas prices were low in the last year, but the demand for Canadian Liquefied Natural Gas (LNG) can change the situation.

As natural gas prices rise, investors with stakes in Peyto can expect to see a boost in share prices. Since the company is operationally quite strong, upward price movement for natural gas can quickly translate to better performance on the stock market.

Foolish takeaway

I typically do not go all-in on commodity stocks, particularly those dealing with the energy sector. However, Peyto stock might be an exception I would make. It is a solid business that can generate significant cash flows even when natural gas prices are low. The company has a diversified consumer base, low-cost assets, and efficient production capabilities. With natural gas only increasing in importance in the coming years, there might be plenty of upside ahead.

As of this writing, Peyto stock trades for $22.98 per share, paying investors $0.11 per share each month, translating to a 5.7% dividend yield. I think it can be a good investment for monthly dividend-seeking investors.

The post Buy This 5.7% Monthly Dividend Stock Today and Hold Forever for Passive Income appeared first on The Motley Fool Canada.

Should you invest $1,000 in Peyto Exploration & Development Corp right now?

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* Returns as of November 17th, 2025

More reading

• Dividend Fortunes: 2 Canadian Stocks Leading the Way to Retirement
• Dividend Investors: Top Canadian Energy Stocks for December
• Passive Income: How Much Do You Need to Invest to Make $500 Per Month?
• This 6.2% Dividend Giant Could Be the Ultimate Retirement Ally
• Invest Ahead: 3 Potential Big Winners in 2025 and Beyond

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.