This 2.5% Dividend Stock Is Practically Free Monthly Money

A monthly dividend stock can be a great investment for any investor. It delivers steady, predictable cash flow that lines up with real-life expenses, making it easier to budget and reinvest. Those more frequent payouts accelerate compounding, smooth out market volatility, and give long-term investors a constant stream of income that can grow over time. For anyone building passive income, that kind of reliability becomes a powerful advantage. Which is why today, we’re going to look at one top option in Extendicare (TSX:EXE).

About EXE

Extendicare is one of Canada’s largest senior-care operators, running long-term care homes, managed services, and home health operations across the country. The dividend stock sits in a uniquely defensive sector of aging demographics, rising care needs, and government-backed funding, making senior care one of the most durable demand stories in the market. Extendicare’s model blends direct long-term care operations with ancillary services like ParaMed home health, providing a diversified revenue base tied to predictable, needs-driven use rather than economic cycles.

The dividend stock has also been reshaping itself after several years of industry turbulence, regulatory changes, and intense labour shortages. Management has been focused on strengthening staffing, improving occupancy, and modernizing homes through redevelopment projects. Extendicare sits at the centre of a national trend. Canada’s aging population is accelerating, and provinces are increasing long-term care funding and capacity, all of which directly support EXE’s long-term earnings foundation.

Into earnings

Extendicare’s latest earnings showed steady progress in the areas investors watch most closely: occupancy, staffing, and margins. Long-term care occupancy continued trending higher as pandemic-era disruptions faded and new admissions normalized across provinces. At the same time, government funding increases tied to staffing and redevelopment made their way into the results. This helped offset wage inflation and agency-staffing costs that previously weighed heavily on profitability. It also contributed to stronger segment operating income and clearer visibility for the coming quarters.

ParaMed, the home-health segment, also delivered better performance following restructuring efforts to streamline operations and reduce reliance on high-cost temporary staff. Earnings improved as hours of care increased and scheduling efficiency strengthened. Overall, management highlighted that the business is stabilizing, redevelopment projects are back on track, and funding tailwinds should continue supporting margins. The tone of the quarter suggested cautious optimism. Extendicare isn’t a fast-growth story, but the essential nature of its services means the earnings recovery is rooted in long-term demand, not one-time boosts.

Monthly cash

So why does Extendicare pay a monthly dividend that feels like “practically free money”? Because it’s backed by one of the most dependable revenue streams in the Canadian market: government-funded senior care. Unlike cyclical businesses, long-term care spending doesn’t fluctuate with recessions, interest rates, or consumer sentiment. People age, care needs rise, and governments fund beds accordingly.

That stability supports a consistent payout that investors can rely on month after month. With cash flow improving and occupancy stabilizing, Extendicare’s dividend sits on much firmer ground today than in previous years, making it one of the more dependable monthly income plays on the TSX. In fact, here’s what $7,000 invested could bring in right away from its 2.5% yield.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTEXE$20.54340$0.50$170.00Monthly$6,983.60

Bottom line

Extendicare’s slow-and-steady nature means it won’t deliver explosive capital gains. Yet for income-focused investors, the combination of essential services, predictable funding, and defensive demand makes the dividend unusually resilient. That reliability is what gives the monthly payout its “free money” feel – cash that arrives like clockwork from a business Canadians will always need, no matter what the economy is doing.

The post This 2.5% Dividend Stock Is Practically Free Monthly Money appeared first on The Motley Fool Canada.

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More reading

• A 2.7% Dividend Stock Paying Every Month Like Clockwork
• Why I’d Go Big on These 2 Small Stocks
• 3 Canadian Stocks Under $50 Poised for Strong Gains in the Next 3 Years

Fool contributor Amy Legate-Wolfe 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.