3 High-Yielding Dividend Stocks on the Verge of a Breakout

SIR Royalty Income Fund (TSX:SRV.UN), Gamehost Inc (TSX:GH), and Alaris Royalty Corp. (TSX:AD) are all stocks on the verge of a breakout that will pay you a juicy dividend to sit and wait.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When looking for high-yielding stocks, investors really have to do their homework. It’s highly unlikely that top-quality stocks will be offered to investors at such juicy yields.

More likely, it will be embattled companies the market thinks may not survive their ongoing issues. This presents opportunities for the investors willing to do the work and research.

Below are three companies whose dividends yield more than 8% and that look as though they might be better positioned than the market is currently pricing them.

The three companies include SIR Royalty Income Fund (TSX:SRV.UN), Gamehost (TSX:GH), and Alaris Royalty (TSX:AD).

SIR Royalty

SIR Royalty Income Fund owns the trademarks associated with a number of large restaurants and concept restaurants mostly in southern Ontario.

The fund receives a 6% royalty on all sales in the restaurant pool. Currently, the annual distribution is $1.26 and trailing 12-month earnings per share are $1.52, so the dividend looks sustainable at current levels.

What is really worrying for the market is the expectation that consumers may cut back discretionary spending, such as eating out at restaurants, if the economy starts to slow down.

While this is a threat, the makeup of SIR’s royalty agreement, means its sales would have to decrease by a substantial amount to bring down earnings per share the ~20% it would need to no longer cover the dividend.

Furthermore, the company has seen an increase to same-store sales for the last two years. It seems as though SIR may be a deal too good to pass up, currently yielding a whopping 9%.

Gamehost

Gamehost is a gaming and hospitality company that is headquartered in Alberta. Due to its operations being in Alberta and the ongoing issues in the oil and gas sector causing problems for the Albertan economy, the stock has been sold off. The stock continues to make new 52-week lows.

Although there aren’t many catalysts for a rebound in economic activity in Alberta in the near term, Gamehost isn’t in as bad a shape as the market is pricing it. The dividend is yielding more than 8% and although the payout ratio is greater than 100%, it barely outpaces it.

If a dividend cut was needed, it would be small and most likely short term, as the company bides its time waiting for a rebound in the economy.

Gamehost has gotten pretty cheap as of late, trading at a P/E ratio of just 13 times at these depressed earnings levels. When the economy turns around, Gamehost will be poised for big growth in earnings and the dividend.

Alaris Royalty

Alaris is always one of the top stocks I recommend for income. The company’s stated long-term goal is to create the optimal dividend stream for investors.

At first glance, the high dividend yield may seem worrying; however, Alaris is regularly traded with a high dividend yield, as the market always assumes it may have trouble with its portfolio.

Alaris, however, has proven to be a top investment company. The company has an impressive 73% return on investments it has exited, including losses.

The company takes advantage of unique circumstances in business owners and operators lives and then gets creative to structure deals that best fit with the entrepreneurs needs.

This allows Alaris to be flexible and make a deal that all can agree on but also allows it to structure deals to give itself exposure to both income and capital appreciation.

Currently, the dividend yields more than 8.25% and pays $1.65 annually. The P/E ratio shows just how cheap it’s trading, at just over 10 times earnings.

Bottom line

Each of these companies is on the verge of a breakout and offers investors attractive dividends to hold for the long term.

Should you invest $1,000 in BCE right now?

Before you buy stock in BCE, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BCE wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. Alaris and Gamehost are recommendations of Dividend Investor Canada.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

RRSP Investors: 3 Canadian Dividend Stocks to Buy on Dips

These stocks have strong track records of dividend growth and now trade at discounted prices.

Read more »

concept of real estate evaluation
Dividend Stocks

Beyond Real Estate: These TSX Income Generators Could Deliver Superior Passive Income for Canadians

These two TSX dividend stocks could offer Canadian investors a reliable income stream and strong long-term upside, without relying on…

Read more »

Confused person shrugging
Dividend Stocks

Better TSX Dividend Stock to Own: Manulife or Sun Life?

While Sun Life stock has outpaced Manulife in the last two decades, which dividend-paying insurance giant is a good buy…

Read more »

coins jump into piggy bank
Dividend Stocks

How to Use Your TFSA to Earn $1,057/Year in Tax-Free Income

Investing $5,000 in each of these high-yield dividend stocks can help you earn over $1,057 per year in tax-free income.

Read more »

Man in fedora smiles into camera
Dividend Stocks

How I’d Build a $20,000 Retirement Portfolio With These 3 TSX Dividend All-Stars

If you're worried about returns and want to focus on dividends, these dividend stocks are the first to consider.

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

If I Could Only Buy and Hold a Single Canadian Stock, This Would Be It

Here's why this high-quality defensive growth stock is one of the best Canadian companies to buy now and hold for…

Read more »

Concept of multiple streams of income
Dividend Stocks

3 Safe Dividend Stocks for Retirees

These three Canadian stocks are ideal for retirees due to their solid cash flows, consistent dividend growth, and healthy growth…

Read more »

dividends can compound over time
Dividend Stocks

3 Canadian Market Leaders Where I’d Invest $10,000 for Sustained Performance

Market leaders like Alimentation Couche-Tard Inc (TSX:ATD) are worth an investment.

Read more »