3 Under-$20 Dividend Stocks to Boost Your Passive Income

Given their stable cash flows and high dividend yields, these three under-$20 Canadian stocks can boost your passive income.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

With inflation at a multi-decade high, the Federal Bank has increased interest rates and expects to raise them further in the coming months. The rising interest rate could increase borrowing costs, thus hurting the margins of growth stocks. So, given the uncertain outlook, investors could strengthen their portfolios by investing in quality dividend stocks.

If you are ready to invest, here are my three top picks that you can buy for under $20.

Algonquin Power & Utilities 

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) operates regulated utility assets and is also involved in renewable power production. Its solid underlying utility business, long-term power-purchase agreements, and strategical acquisitions generate stable and reliable cash flows. Supported by these robust cash flows, the company has raised its dividend for 12 years. It had increased its quarterly dividend by 6% to $0.2345/share earlier this month, with its forward yield currently at 5.1%.

Meanwhile, the company is continuing its capital investment program of $12.4 billion for the next five years, which could grow its rate base at a CAGR of 14.6%. The rate base growth could expand its adjusted EPS at a 7-9% annualized rate. So, the company is well positioned to continue its dividend growth in the coming years. Given its growth prospects, high dividend yield, and attractive NTM price-to-earnings multiple of 19.2, I believe Algonquin Power & Utilities would be an excellent addition to your portfolio.

Pizza Pizza Royalty

Supported by its highly franchised business model, Pizza Pizza Royalty (TSX:PZA) generates stable cash flows irrespective of the economic cycle. Meanwhile, with the easing of restrictions, the company has reopened its non-traditional restaurants and dining spaces, which could boost its walk-in sales. The company has restarted its restaurant development program and expects to increase its restaurant count by 5% this year.

Along with these initiatives, the company’s investment in strengthening its digital channels could continue to drive its sales. So, I believe Pizza Pizza Royalty’s dividend is safe. With a monthly dividend of $0.065/share, its forward yield stands at a juicy 6.22%. Meanwhile, the company’s NTM price-to-earnings stands at 15.3, making it an attractive buy.

NorthWest Healthcare Properties REIT

REITs must pay 90% of their net earnings to shareholders, thus making them a reliable source of stable passive income. So, I have picked NorthWest Healthcare Properties REIT (TSX:NWH.UN) as my third pick. Supported by its highly defensive healthcare portfolio, long-term agreements, and government-backed reliable tenants, the company’s occupancy and collection rate remain higher.

Also, its strategical acquisitions and inflation-indexed rent boost its cash flows, allowing it to pay a dividend at a healthy rate. With a monthly dividend of $0.0667, its forward yield stands at a juicy 6.18%.

Meanwhile, NorthWest Healthcare delivered three fully leased projects valued at around $103 million in the first quarter. It has around $306 million worth of projects under construction. It is also working on expanding its presence in Australia, the U.K., and the U.S. It also strengthened its liquidity position by raising approximately $174 million through new equity offerings. So, given its growth initiatives, stable cash flows, and strong balance sheet, I believe NorthWest Healthcare is well equipped to continue paying a dividend at a healthy rate.

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.

The Motley Fool has positions in and recommends PIZZA PIZZA ROYALTY CORP. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

More on Dividend Stocks

analyze data
Dividend Stocks

2 Safe Dividend Stocks That Could Help You Fight Inflation

A dependable stream of passive income is one way to help offset rising inflation rates. Here are two top dividend…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

Stay Invested in a Recession: Increase Positions in 2 Value Stocks

The suggestion of market analysts is to increase positions in two value stocks if you want to stay invested amid…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Dividend Stocks to Buy as Inflation Surges in Canada

If you're worried about how surging inflation may impact your portfolio, here are three of the best dividend stocks to…

Read more »

You Should Know This
Dividend Stocks

High Inflation: The Good and the Bad for Canadians

Consider tucking away some of your long-term savings in quality dividend stocks like Brookfield Infrastructure in this correction.

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

1 Oversold REIT Stock to Buy for Safe Dividends

If you're looking for stable dividend income from an oversold stock, this office REIT is a perfect option.

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

3 Cheap Canadian REITs to Buy in 2022

Are you looking for passive income? Start treasure digging in cheap Canadian REITs in this market correction!

Read more »

Dividend Stocks

TFSA Passive Income: 3 Undervalued, High-Yield TSX Dividend Stocks to Buy Now

These top TSX dividend stocks with high yields now look attractive to buy for TFSA passive income.

Read more »