The Canadian economy has not been in the greatest shape for a long time, and investors are actively seeking additional revenue streams to supplement their income. Dividend investing is perhaps one of the best ways for investors to earn passive income. The worst impact of the pandemic has passed, and many people who lost their jobs now have work again.
Unfortunately, the inflationary environment has hiked up the prices of all goods and services. Meeting your monthly expenses may require earning more money. Creating a dividend-income portfolio can help you achieve this goal and supplement your active income. If you invest in the right group of dividend-paying stocks, you can earn a decent amount through shareholder dividends.
High-yielding dividend stocks
Investing in high-quality dividend stocks with track records for regularly paying their investors dividends is the best way to go. However, you should also seek high-yielding dividend stocks to boost your dividend income portfolio and secure you financially whenever the next bear market comes around.
There’s no shortage of high-yielding dividend stocks on the TSX, but that does not mean you can invest in any of them. It pays to conduct your due diligence to identify high-quality dividend stocks aligning with your goals. You do not just need to invest in dividend stocks with massive payouts. You must also ensure that the underlying business has solid fundamentals to support high-yielding payouts.
Diversified Royalty stock
Diversified Royalty (TSX: DIV) is a high-yielding dividend stock you can consider for this purpose. It is not a high-priced stock but comes with a massive dividend yield.
Diversified Royalty stock trades for $2.84 per share as of this writing. At current levels, it boasts a juicy 7.75% dividend yield. Suppose you accumulate $55,000 worth of its shares in your portfolio. In that case, you can earn $4,306.50 through shareholder dividends annually, translating to $11.79 daily.
Diversified Royalty is a $353.67 million market capitalization multi-royalty company headquartered in Vancouver. The company is engaged in the business of acquiring royalties from some of the top multi-location businesses and franchisors throughout North America.
The company purchases the trademarks of the companies it acquires but gives its partners the benefit of full operational control over their businesses. In turn, Diversified Royalties generates revenues by receiving royalties and management fees from its royalty partners.
Diversifying across several industries and geographic locations allows the company to protect its revenue streams. It boasts several popular names under its belt, including Mr. Lube, AIR MILES, Oxford Learning Center, Mr. Mikes, and Sutton.
The pandemic was not easy on businesses in any sector of the economy. It was only natural that Diversified Royalties would also suffer losses, and it did. The company’s net income in 2019 was $14.04 million, but the pandemic saw it suffer a net loss of $8.88 million the next year.
Fortunately, the company’s management was quick to respond to the crisis. Its board of directors took measures to preserve its capital and maintain a strong liquidity position, including reducing its dividend payouts.
Foolish takeaway
2022 has been a far better year for the company than 2020. It collected roughly $20.57 million through royalties for the first six months of the year — an uptick of 24% compared to the same period last year.
Diversified Royalty’s second-quarter performance in fiscal 2022 saw its strongest-ever performance. It generated $11.1 million in adjusted revenue. The company’s distributable cash increased by 19% year over year to $15.1 million.
If you want to give your dividend income portfolio a significant boost, it might be a good idea to allocate a portion of your investment capital to Diversified Royalty stock.
