Investors could buy high-yielding dividend stocks to boost their passive income to ease some of the pressure in this inflationary environment. However, rising interest rates and uncertain outlooks have dented the financials of several companies. So, investors should be careful in choosing stocks. Meanwhile, I am bullish on the following three TSX stocks that are fundamentally strong and pay monthly dividends at a healthier yield.
Pizza Pizza Royalty
Pizza Pizza Royalty (TSX: PZA) owns and operates Pizza Pizza and Pizza 73 brand restaurants through franchises. The company collects royalties from its franchisees based on their sales. So, rising prices will not have much impact on its financials. Meanwhile, the company posted a solid fourth-quarter (Q4) performance earlier this month, with its same-store sales growth growing by 13% while its adjusted EPS (earnings per share) increased by 11.1%.
The increase in consumer footfall amid the easing of restrictions and growth in average consumer check size drove its same-store sales. New restaurant openings over the last 12 months also increased royalty pool sales. Supported by its solid financials, Pizza Pizza Royalty increased its monthly dividend by 3.6% to $0.0725/share, with its yield at 6.35%.
Meanwhile, the company continues constructing new restaurants and expects to increase its restaurant count by 3-4% this year. Its innovative product launches and creative marketing strategies could continue boosting sales this year. So, I believe Pizza Pizza Royalty’s future payouts are safe, making it an attractive buy for income-seeking investors.
TransAlta Renewables
TransAlta Renewables (TSX: RNW) owns or has an interest in 48 renewable energy assets with a combined power-generating capacity of three gigawatts. Meanwhile, the company sells most of its power through long-term PPAs (power-purchase agreements), with an average remaining contractual life of these contracts at 12 years. Supported by these long-term PPAs, the company has been paying dividends at a healthier rate since going public in 2013. With a monthly dividend of $0.07833/share, its yield for the next 12 months is a juicy 7.9%.
Meanwhile, TransAlta Renewables has planned to put several assets into service in Australia. The company also hopes to bring back its Kent Hills facilities into service this year. Amid these growth initiatives, the company’s management has provided optimistic guidance, with the midpoint of its 2023 adjusted EBITDA and free cash flows guidance representing a 5.7% and 3.7% growth from 2022. The company trades at an attractive NTM (next 12-month) price-to-earnings multiple of 14.5, making it an attractive buy.
NorthWest Healthcare Properties REIT
My final pick is NorthWest Healthcare Properties REIT (TSX:NWH.UN), which has been under pressure over the last few months. Amid the rising interest rates, the real estate investment trust has lost around 39% of its stock value compared to its 52-week high. Amid the selloff, the company’s yield has increased to 9.3%. Its NTM price-to-earnings multiple has declined to an attractive 7.5, making it an attractive buy for investors looking at a stable passive income.
Meanwhile, NorthWest Healthcare owns and operates 233 healthcare properties with a total leasable area of 18.6 million. The company’s long-term lease agreements and government-backed tenants would drive its occupancy and collection rates. Also, the company’s financials have sufficient protection against price rises, with around 82% of its rent indexed to inflation. Meanwhile, the company is expanding its footprint in the United States, Canada, and Australia, which could boost its financials in the coming years. So, I expect NorthWest Healthcare to continue paying dividends at a healthier rate.
