Want to Grow Your Dividend Income? Choose These 2 Stocks

Dividends are one of the resilient features of the stock market. If you need to grow your dividend income some more, Bridgemarq stock and Diversified Royalty stock pay dividends of no less than 8%.

| More on:

Earning passive income has been crucial, if not urgent, during the health crisis. The Canadian economy survived the biggest collapse (5.4% GDP contraction) but has gained momentum entering 2021. However, the abnormal recession not seen before persists.

Fortunately, the household savings rate increased in the early months of the pandemic. Canadians have free cash to create more income streams. Likewise, they should start to appreciate, not overlook, the Toronto Stock Exchange’s (TSX) simplest fundamental: dividend yields. Dividends are also one of the resilient features of the stock market.

The TSX is doing okay in 2021 but remains bumpy. Still, it shouldn’t prevent you from growing dividend income. Bridgemarq (TSX:BRE) and Diversified Royalty (TSX:DIV) pay at least 8% dividends if you need to grow dividend income substantially.

Realtors’ income source

Bridgemarq did not slash dividends, despite the 7.7% and 75.1% decline, respectively, in revenue and net income in 2020 versus 2019. The $158.38 million company ended the year with $13.9 million in distributable cash flow. Meanwhile, the stock still gains by 16.11% year to date. Over the last 10 years, the total return is 163.73% (10.17% CAGR). The current share price is $16.70, while the dividend yield is 8.08%.

The leading provider of services to residential real estate brokers has a network of roughly 19,000 realtors. Bridgemarq’s brands, Royal LePage, Via Capitale, and Johnston & Daniel, have a combined 289 franchise agreements. In 2020, management suspended fixed franchise fees in 82% of its realtors’ network.

Bridgemarq’s temporary alternative to its standard fee plan was the Pandemic Fee Relief Plan. Management implemented an increased variable fee of 3% to 4.2% of gross commission income, up to a limit. According to its president and CEO, the relief plan helped realtors weather the unprecedented economic slowdown.

The company announced that effective January 1, 2021, Bridgemarq’s traditional fee plan (fixed franchise fees) is back. Would-be investors should know that Bridgemarq is an affiliate of Brookfield Business Partners. The latter is a business services and industrials company focused on owning and operating high-quality businesses.

Top royalty company

At $2.50 per share, Dividend Royalty pays a fantastic 8% dividend. Current investors are up 7.86% year to date. In 2020, the $302.97 million multi-royalty corporation reported a 13.7% increase in adjusted revenue versus the prior year.

Dividend Royalty has been around since 1992 and primarily engages in acquiring top-line royalties. Its objective is to acquire predictable, growing royalty streams from diverse multi-location businesses and franchisors in North America. The trademarks it owns today are AIR MILES, Mr. Mikes, Mr. Lube. Nurse Next Door, Oxford Learning Centres, and Sutton.

Mr. Lube (43.6%) and AIR MILES (19.9%) are the top contributors to the royalty firm’s total revenue. Management constantly monitors the impact of the pandemic on the businesses of Royalty Partners. DIV’s president and CEO Sean Morrison is confident their royalty partners are well positioned for a meaningful recovery post-vaccination. Likewise, DIV intends to pursue accretive royalty purchases to increase cash flows.

Understand the risks

Market analysts agree that dividend stocks are one of the best sources of income of any asset class. However, prospective income investors must understand the business risks of their stock prospects. It would be best to be well informed before making a firm investment decision.

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 Christopher Liew has no position in any of the stocks mentioned.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »