3 Dividend Beasts with Over 7% Yields

Canadian investors can earn generous passive income every month from three dividend beasts whose yields are over 7%.

| More on:
Silver coins fall into a piggy bank.

Source: Getty Images

High inflation will likely persist until the Bank of Canada can bring the rate down to its 2% target. Unfortunately, the timeframe is undeterminable, and it’s almost certain that more rate hikes are coming to contain it fully. With the rising price of goods and services, dividend investing can help you endure this new era of high inflation.

Canadians have plenty of dividend stock choices on the TSX. But, if you’re a high-yield seeker or have limited capital to invest, these are the three dividend beasts that should be on your radar. Royalty companies like Freehold Royalties (TSX:FRU), Diversified Royalty (TSX:DIV), and Boston Pizza (TSX:BPF.UN) have yields of more than 7%, allowing you to combat rising costs with generous passive income streams.

Solid income provider

Freehold Royalties has been a solid income provider in 2022 owing to the vigorous activities of its royalty assets in North America. The $2.25 billion oil & gas royalty company owns vast tracts of royalty lands in Canada (five provinces) and the U.S. (eight states).

According to management, the diversity of industry operators in its land holdings lowers risk and ensures steady royalty income streams. The three consecutive quarters of record funds from operations also reflect in the energy stock’s performance. At $14.93 per share, current investors enjoy a 33.76% year-to-date gain on top of the juicy 7.23% dividend.

The Board of Directors recently gifted shareholders on record, as of July 29, 2022, a 13% dividend hike (the seventh increase in two years). Because Freehold pays monthly dividends, a $16,600 investment will generate $100 in extra monthly income.  

Cheap dividend machine

Diversified Royalty trades at only $2.90, but the dividend yield is a mouth-watering 7.91%. Interestingly, this dividend machine is also beating the market year-to-date, +8.25% against -5.82%. On September 8, 2022, management announced a dividend hike to its monthly dividend.

Its President and CEO, Sean Morrison, said, “DIV is pleased to announce a 6.8% dividend increase as our royalty partners, on an aggregate basis, experience positive trends consistent with DIV’s second-quarter earnings results.” In Q2 2022, net income grew 36.5% to $7.1 million versus Q2 2021.

Moreover, the $11.1 million revenue during the quarter was DIV’s strongest revenue quarter since adopting its multi-royalty strategy nine years ago. This $360.52 million multi-royalty corporation collects royalties from six royalty partners led by Mr. Lube, AIR MILES, Sutton, Mr. Mikes, Nurse Next Door, and Oxford Learning Centres.

Cash cow

Boston Pizza is a cash cow for its ultra-high 7.82% dividend in the restaurant segment. Business in the first half of 2022 was surprisingly strong, with the 383 Boston Pizza restaurants in the royalty pool reporting a 50.8% year-over-year increase in franchise sales. Notably, cash flow from operating activities rose 27.5% to $15.77 million versus the same period in 2021.

Management said sales in Q2 2022 were the strongest since the start of the pandemic. Because Boston Pizza’s franchise sales results during the quarter exceeded pre-pandemic levels, the $349.3 million royalty fund increased its monthly cash distribution rate by 17.6%. If you invest today, the share price is $16.23. 

Monthly dividends

Income investors looking for higher dividends can consider buying any of these three dividend beasts. The respective businesses are doing pretty well, notwithstanding the headwinds.

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. The Motley Fool recommends FREEHOLD ROYALTIES LTD.

More on Dividend Stocks

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »