“Getting the most returns with the least amount of work” is the definition of efficiency. When it comes to starting an easy income through investment, one way to achieve this efficiency is by investing in high-yield dividend stocks. They can start generating a decent income for you (proportional to the capital invested), and you will not have to expend any effort.
An energy royalty company
Royalty companies like Freehold Royalties (TSX: FRU) offer you exposure to certain asset classes and commodities while shielding you from many of the risks and challenges inherent to the underlying assets/commodities. In the case of Freehold, you essentially get exposure to oil and gas properties in Canada and the United States. The current portfolio is made up of 149 Canadian wells and 101 U.S. wells.
The company makes its money by taking on a monetary stake in the oil exploration and production operations of companies like Peyto. A sizeable portion of that money is redirected to the investors via dividends.
And though the current yield of 6.1% seems quite promising, it’s relatively lower compared to the company’s usual yield and is the result of a massive growth phase that pushed the market value of the company up by 112% in the last 12 months.
A mortgage investment company
Timbercreek Financial (TSX: TF) allows you to invest in the mortgage industry. The company, like several other non-bank mortgage lenders, caters to a target audience that the big banks can’t or won’t. In the case of Timbercreek, these are usually residential and commercial property owners or developers looking for short-term structured financing solutions.
If we gauge the performance of the stock, Timbercreek can be considered quite a stable company. Its share price has hovered around the baseline price of $9 per share since 2016. Even after the market crash, when the stock fell quite hard and partially recovered, the stock has returned to that normal. The current yield of 7.2% seems more than just adequate, but you can do better by waiting for another dip.
A REIT
One of the richest pools of high-yield dividend assets is REITs, and True North Commercial (TSX: TNT.UN) is a good example. This relatively small commercial REIT is currently offering a mouthwatering 8.2% yield, and that’s when it’s trading at an 11% discount from its pre-pandemic peak. You can lock in a much higher double-digit yield by buying the dip.
And this high yield comes at a very attractive valuation and a payout ratio that may not seem safe (103%). Still, it’s relatively stable considering this REIT’s history of payout ratios. It has a geographically diversified portfolio of office properties though the heaviest concentration is naturally in Ontario.
Foolish takeaway
Creating a passive income to augment the primary income is one of the primary reasons why many people learn to invest. Even though they are not aristocrats, the three dividend stocks offer a decent combination of dividend safety and high yield, making them ideal picks for an easy income.
