This 6.1% Dividend Stock Is My Top Buy for Income Right Now!

This impressive dividend stock earns stable revenue, has good growth potential, and offers a more than 6% dividend, making it a top buy today.

| More on:
data analyze research

Image source: Getty Images

One of the best reasons to buy stocks is for the dividend income they can provide. Having the ability to save up some cash and put it to work for you, where it immediately begins to earn you income, is a significant advantage. And right now, with the stock market struggling to rally, earning income from dividend stocks is even more important to investors.

This makes stock selection extremely important for investors. You want to find stocks that are attractive, trading undervalued and offering an appealing dividend yield. However, you also want to find robust stocks you can rely on, particularly if the economic and market environments continue to worsen before they get better.

That’s why my top dividend stock to buy right now, especially if you’re looking to boost your passive income, is Pizza Pizza Royalty (TSX:PZA).

Pizza Pizza is one of the best dividend stocks to buy in Canada

There are several reasons why Pizza Pizza is one of the best stocks to buy for dividend income, with the first being its makeup as a royalty corp.

Because Pizza Pizza earns a royalty from sales at each of the franchise locations across Canada and doesn’t have to worry about the profitability of individual restaurants, it’s an ideal investment to buy for dividend income.

Another reason why Pizza Pizza is one of the best dividend stocks to buy now is that Pizza Pizza is one of Canada’s most recognized quick-service restaurant chains. This widespread recognition means a consistent customer base and steady revenues.

And those steady revenues are another reason it’s ideal as a dividend payer. With hundreds of franchises under its umbrella across the country, the corporation benefits from the collective success of all its outlets.

In addition, though, it has minimal expenses. So, it simply collects the royalties and pays a small administration expense and then interest and taxes. Therefore, typically, it has a net income margin of roughly 72-78%. Then Pizza Pizza aims to return nearly all of its earnings to investors through its dividend.

So, the fact that it has such strong brand recognition, hundreds of locations across the country, and its own in-house delivery service make it one of the best-known quick-service restaurants in Canada and a top dividend stock to buy for the long haul.

It’s also why Pizza Pizza is relatively resilient to economic downturns. Low-cost, fast-food options, pizza in particular, often remain popular, even during economic downturns. This can mean steadier revenues for Pizza Pizza compared to companies in more volatile sectors but also compared to its restaurant stock competitors.

We already saw the stock weather the pandemic better than any other quick-service restaurant and a lot better than traditional restaurant stocks.

Therefore, Pizza Pizza is an excellent dividend stock to buy and hold for the long haul, especially in the current uncertain market environment.

Pizza Pizza has plenty of growth potential

In addition to Pizza Pizza being one of the best dividend stocks to buy due to its relatively stable revenue and minimal expenses, the stock is also an attractive investment due to the growth potential it has.

Now that the pandemic is behind us, there’s potential for further growth and expansion across Canada, especially in markets where Pizza Pizza and Pizza 73 have a lower presence. Furthermore, Pizza Pizza has also begun to expand into Mexico.

Plus, Pizza Pizza is known to constantly innovate with its menu, catering to a wide range of dietary preferences and needs, from gluten-free options to plant-based toppings. This adaptability can appeal to a broader customer base and continue to help drive sales growth.

So, if you’re looking to boost your income and find a high-quality dividend stock to buy for your portfolio today, Pizza Pizza, with its more than 6.1% dividend yield, is one of the best investments you can make right now.

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.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Canadian Dollars
Dividend Stocks

Buy 734 Shares of This Top Dividend Stock for $9,574 a Year in Passive Income

Are you looking to earn regular income? Now is an opportune time to buy Dividend Aristocrats at discounts and accelerate…

Read more »

A plant grows from coins.
Dividend Stocks

This Ultra-High Yield Stock Just Hit a 52-Week Low, and it’s Still a Buy Today

Enbridge Inc (TSX:ENB) stock recently hit a 52-week low. Here's why.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 6% Dividend Stock Pays Cash Every Month

Are you looking to earn cash every month from October 15 onwards? This 6% dividend stock gives you monthly payouts.

Read more »

Person slides down a stair handrail
Dividend Stocks

With a 7.6% Dividend, This TSX Stock Is One to Buy Now and Hold for Decades

Now is an opportune time to invest in this no-brainer TSX stock and get +$30 extra dividend for decades on…

Read more »

Portrait of woman having fun in the street.
Dividend Stocks

CPP Benefits Will Be Higher for Millennials and Gen Z

Older Canadians won't get enhanced CPP, but they may invest in dividend stocks like Royal Bank of Canada (TSX:RY).

Read more »

A plant grows from coins.
Dividend Stocks

The Best Dividend Stocks in Canada Right Now

Seeking to give a boost to your income portfolio, consider investing in these best Canadian dividend stocks.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Retirees: Want Fast-Growing Passive Income? Here Are 3 Long-Term Dividend Stocks

Are you looking for dividend stocks that can grow their distributions very quickly? Here are three long-term picks!

Read more »

dividends grow over time
Dividend Stocks

2 Top Dividend Stocks You Can Buy and Hold Forever

The market is full of great dividend stocks, but not all are long-term gems. Here are two options that you…

Read more »