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Safe Income = Safe Dividends: 3 TSX Companies With Both

High dividends don’t mean safe dividends, so consider these three dividend stocks that offer stable income and safe yields.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published May 16, 2023 8:00 am EDT

When it comes to dividends, investors shouldn’t simply look at a high yield. A yield can always crash and burn should a stock suddenly decide to slice its dividend. No, instead what you want is a safe dividend. That means solid, stable income coming in no matter what.

Luckily, in the case of these three dividend stocks that’s exactly what you get. So without further blabbing on, here are the three I would consider in this market.

NorthWest REIT

NorthWest Healthcare Properties REIT (TSX:NWH.UN) recently came out with its earnings report. The good news, it was stable. The bad news, that’s pretty much all the company had on offer. But honestly, that’s kind of why I would recommend NorthWest stock among dividend stocks.

Occupancy remained at 97%, with a 13.6-year lease agreement on average on its properties. This is a solid company that seeks out long-term investments in the healthcare industry. What’s more, there is more growth on the way. The company is about to close a joint venture in the United Kingdom, due June 30. This should bring even more stable income over the years.

Yet shares are still down 38% in the last year, and 18% year to date as of writing. While earnings led to a slight increase, it wasn’t anything noteworthy. So now is the time to pick up NorthWest stock with a 10.04% dividend yield.

Slate Grocery REIT

While healthcare certainly is stable, so is food. That’s why Slate Grocery REIT (TSX: SGR.UN) continues to do well even in this market downturn — at least, in terms of company performance. Shares are down 11% in the last year, and 14.5% year to date.

During its most recent earnings report, revenue climbed 30% year over year, with net operating income (NOI) also up by 23.8%. The problem is it’s operating at a loss, which investors haven’t been too impressed with. That being said, the company stated it has improved its financial position, looking to bring down debt and create funds flow long term. This will help Slate stock continue on its growth path.

Slate stock now offers a 9.03% dividend yield as of writing, trading at a valuable 6.8 times earnings. So it’s certainly one to consider today. Because frankly, people always need to eat!

A&W Royalties

Finally, you might think that mentioning a fast food chain isn’t exactly stable. That might be true, if it weren’t a royalty fund. This is where the income fund simply brings in cash from the revenue of its franchise locations. This is stable income no matter how the market is doing, no matter how the chain is doing, no matter what.

That’s why I would recommend A&W Revenue Royalties Income Fund (TSX: AW.UN). Income has remained stable, and really so has the stock. Shares are down 5% in the last year, but up 5.6% year to date. It offers a 5.15% dividend yield as well, with income coming in from 854 locations, 845 of which are franchised.

A&W stock is likely to continue doing well, as the company continues to open up more locations and franchise more stores. So for a less risky option for monthly income, I would certainly consider A&W stock as well alongside your other dividend stocks.