Who doesn’t like getting an extra paycheque every month?
There are many ways you can accomplish such a thing. You could take on a side job, or maybe start a small part-time business. You could even purchase a rental property, which is a popular option among Canadians.
But the problem with all of those options is that they require time. Between working the day job, family responsibilities, and keeping the house maintained, most folks I know don’t have a whole lot of extra time to exchange for money. Even if you own a rental property is mostly a hands-off investment—especially if you employ a property manager—there’s still going to be work that needs to be done. Hiring it out is an option, but that limits your profit.
My favourite way to receive extra cash each month is through good old-fashioned dividend payments. For as little as a $20,000 investment, you could secure yourself a $100 monthly raise for the rest of your life, all without lifting a finger.
A 6% dividend yield might not seem realistic in today’s world of low interest rates, but don’t let the naysayers fool you. There are plenty of high-quality Canadian stocks that pay consistent and dependable dividends in excess of 6% annually, and on a monthly basis, too. Let’s look at three that would look good in your portfolio.
Artis Real Estate Investment Trust (TSX:AX.UN) is one of Canada’s largest owners of property, with more than 16 million square feet worth of leasable area over 185 different locations in Canada, as well as eight million square feet spread over 56 properties in the United States. About half of its portfolio is in office towers, with the rest divided among industrial and retail uses.
Shares have struggled lately, as investors are concerned that Alberta’s oil slump will lead to a reduced bottom line, as well as general concerns about interest rates creeping up. While these are certainly issues, I think they won’t end up being a big deal. Most of Artis’ tenants in the energy sector are the large players, who aren’t about to shut down just because of the latest downturn.
This gives investors an opportunity to pick up shares at a yield of almost 7.5%. And with a payout ratio of just over 75%, investors can rest well at night knowing the dividend is secure.
Corus Entertainment Inc. (TSX:CJR.B) is an underrated free-cash-flow machine that is being beaten down by a problem I believe is being blown out of proportion.
Corus owns quite a few Canadian specialty television channels, including Teletoon, Treehouse, YTV, CMT, The W Network, Cosmo TV, and the Western Canadian rights to HBO. Thanks to a new mandate from the CRTC allowing folks to pick and choose cable channels without having to buy a bundle, more than 30% of investors’ shares have sold off.
Management thinks the market is overreacting. Corus reaffirmed its free-cash-flow guidance for 2015 would still be around $180 million, which puts the stock at just eight times free-cash-flow. And since the 6.4% dividend only costs about half of the company’s free cash flow annually, it’s about as safe as 6% yields get.
Boston Pizza Royalties Income Fund (TSX:BPF.UN) has become Canada’s largest casual dining chain, with sales of more than $1 billion over 350 restaurants from coast to coast. The company has come a long way since former RCMP officer Jim Treliving quit the force in 1968 to open a location in Penticton, B.C.
It’s such a simple business. The Income Fund takes 7% of each franchisee’s sales for letting it use the name and trademark. Each franchisee also pays 2-3% of sales towards marketing, which the parent company then pools together and spends. Since there’s very little in overhead, investors can count on those franchise fees to deliver consistent dividends.
The current yield is 6%, and the company has raised dividends three times since converting from an income trust to a corporation in 2011. The fund does have a high payout ratio, but Boston Pizza is an established brand and continues to remain popular with consumers. It’s not going away anytime soon.
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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 Nelson Smith owns shares of Corus Entertainment Inc.