3 Dividend Stocks With Oversized Yields

Dividend stocks lie over a broad spectrum of yields and sustainability, and it’s not always possible to get the best of both worlds.

| More on:
money cash dividends

Image source: Getty Images

For stocks that combine both dividends and capital growth potential, you might be willing to overlook a smaller yield if it’s being offset by decent growth potential. But if you are investing in dividend stocks solely for the purpose of generating passive income, then the yield is probably the most important variable in the equation for you, though you should keep the sustainability of dividends in mind as well.

And if you are looking for dividend stocks that offer oversized yields, there are three that should be on your radar.


Inovalis (TSX:INO.UN) has not yet recovered its pre-pandemic valuation. The stock peaked in May, and it has been on a steady decline ever since. It’s still down 14% from its pre-pandemic value, yet it’s still a bit overvalued. But the stock didn’t offer much capital growth potential even before the pandemic, and the main reason to buy it is its dividends.

The REIT is offering a mouthwatering 8.72% yield. The payout ratio is quite high (470%), but the REIT hasn’t just sustained its dividends, but it also gave a special dividend to its investors in July 2021, which is equivalent to four and a half of its regular monthly dividends. The revenues are still fluctuating, but if the REIT didn’t slash its dividends during the actual financial crisis, it’s unlikely to do so during recovery.

A sugar company

Rogers Sugar (TSX:RSI) is one of the most generous dividend stocks in the consumer staples sector. As the largest refined sugar distributer in the country and one of the largest in North America, Rogers has a stable business model and little to fear from the competition. It also holds the distinction of being the world’s largest maple syrup producer.

The company engages in both B2B and B2C transactions, so its revenue stream is diversified by more than just its product line-up. As a generous dividend stock, Rogers is currently offering a decent 6.5% yield at a relatively stable payout ratio of 87.8% and had sustained its dividends even when this ratio crossed 100% at least twice in the past five years.

A mortgage company

Mortgage companies saw businesses booming in the last 12 months or so. Property prices skyrocketed in the country, yet the buyers were active in the housing market thanks to low interest rates. This market trend has been powerful for mortgage companies like Timbercreek Financial (TSX:TF), which ironically targets commercial real estate but got to ride the growth wave alongside the rest of the real estate market in the country.

Timbercreek currently offers an impressive 7.1% yield, and it has sustained its dividends through unstable payout ratios during two of the last three years. And it is maintaining its dividends, despite a payout ratio of 135%. And since the company is focused on commercial properties, it might stay safe even if a housing crash is inevitable and continue rewarding its investors with generous dividends.

Foolish takeaway

The three dividend stocks offer generous yields and can help you start a sizeable passive income if you invest a hefty sum in the companies. And despite the mouthwatering yields, which is sometimes a danger sign, the dividends look quite sustainable. And as we are moving toward a more stable financial future, the dividends might become even more rock-solid in the coming years.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Inovalis REIT.

More on Dividend Stocks

A plant grows from coins.
Dividend Stocks

Invest $10,000 in 2 TSX Stocks for $606/Year in Passive Income

Shares of these two fundamentally strong companies can start a worry-free passive income stream.

Read more »

dividends grow over time
Dividend Stocks

2 Top Dividend Stocks That Keep Raising Their Payouts

In addition to their solid dividend growth track record, these top dividend stocks also offer strong growth potential for the…

Read more »

Canadian Dollars
Dividend Stocks

Buy 500 Shares of This Super Dividend Stock for $1,830/Year in Passive Income

This super dividend stock offers high yield and visibility over earnings growth. It can help you earn $1,830 in passive…

Read more »

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

1 Magnificent TSX Dividend Stock Down 13% to Buy and Hold Forever

This dividend stock is down 13% as of writing, marking a significant opportunity for those seeking out income and value…

Read more »

Increasing yield
Dividend Stocks

Passive Income: The Investment Needed to Yield $10,000 Per Annum

Here's the math on how much you would need to invest to achieve $10,000 a year in passive income.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

Got $3,000? 3 Dividend Stocks to Buy and Hold for the Long Term

These TSX dividend stocks look cheap today.

Read more »

Dividend Stocks

10 Years From Now, You’ll Be Glad You Bought These Magnificent TSX Dividend Stocks

The TSX is lucrative to buy these magnificent dividend stocks in bulk and be proud of this decision 10 years…

Read more »

calculate and analyze stock
Dividend Stocks

4 Fabulous Dividend Stocks to Buy in July

Are you looking for long-term income? These four dividend stocks should not only provide you with value in July but…

Read more »