Income investors can generate passive income through dividend investing. However, if the goal is specific, two high-yield TSX stocks paying monthly dividends can generate your desired amount.
The average dividend yield of Freehold Royalties Ltd. (TSX:FRU) and Chemtrade (TSX:CHE.UN) is 7.46%. Assuming you allocate $8,050 for each stock ($16,100 total investment), you can make $100 in monthly passive income.
Freehold Royalties should attract more investors in 2023 after several record-setting achievements last year. The $2.2 billion energy royalty company is benefitting from its “new look” due to the enhanced scale of the business. At $14.86 per share (-4.48% year-to-date), you can partake in the 7.19% dividend.
Dividends also increased 500% from COVID-related lows, and despite lower commodity prices, Freehold can sustain higher payouts. Last year, the $141.6 million total dividend payment was 128% higher than in 2021. Notably, the payout ratio was only 45%. Management said it could maintain the current dividend level even if lower commodity pricing persists.
Freehold owns the most extensive non-government portfolio of oil & natural gas royalties. The royalty oil and gas company has 18,000 producing wells and collects royalty streams from 380 top drillers. Because of the intense focus on business development and accretive acquisitions, the land base in North America is still expanding.
For the full-year 2022, royalty and other revenue reached $393 million, an 88% year-over-year increase and a new record for Freehold. Net income increased exponentially by 190% to $209.2 million compared to 2021. Management is committed to delivering growth and lower-risk attractive shareholder returns over the long term.
Chemtrade should be on investors’ watchlists following a record year in 2022. Expect interest in this small-cap stock to heighten further if the Q1 2023 results coming out on May 10, 2023, are equally stellar. The $878.8 million company supplies high-quality industrial chemical products in North America and other international markets.
The Sulphur and Water Chemicals (SWC) and Electrochemicals (EC) businesses are major revenue contributors. These core segments cater to various industries, including water treatment, agriculture, pulp and paper, oil refining, and food production. However, management sees continued tailwinds in electro-chemicals in the next few years.
For the full-year 2022, net earnings reached $109.1 million compared to a $235.2 million net loss in 2021. Meanwhile, cash flows from operating activities soared 68.6% year over year to $369.2 million. If you invest today, the share price is $7.60 (-13.87% year-to-date), with a corresponding dividend yield of 7.72%.
In Q4 2022 alone, the operating segments combined to post strong double-digit growth in revenue (a 29% increase to $456.7 million from Q4 2021). President and CEO, Scott Rook, said, “The fourth quarter of 2022 marked a strong end to a record year for Chemtrade.”
Rook adds that Chemtrade isn’t struggling with significantly higher energy costs compared to competitors because it has access to low-cost, regulated renewable hydropower. He sees a bright outlook and expects the organic growth projects in the pipeline to generate an incremental $75 million of adjusted EBITDA over the next five years.
Monthly dividend advantage
Many income investors prefer receiving monthly dividends over quarterly payouts because you can incorporate them within your monthly budget. Your capital will also compound faster if you can reinvest the dividends 12 times a year, instead of 4.