After touching a 27-month low of 2.8% in June, Canada’s inflation rose to 3.3% in July. It was also higher than analysts’ expectations of 3%. The increase in energy prices and higher mortgage expenses drove inflation higher. Meanwhile, grocery prices continue to remain elevated. With elevated prices lowering consumers’ discretionary income, one should look towards having a secondary or passive income to maintain the same lifestyle in this inflationary environment.
One of the convenient ways to earn a stable passive income is by investing in high-yielding dividend stocks. Here are four cheap dividend stocks you can buy right now.
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Pizza Pizza Royalty
First on my list would be Pizza Piza Royalty (TSX: PZA). Although the company has witnessed healthy buying this year, with its stock price rising by 11.6%, it trades at 0.8 times projected sales for the next four quarters, making it an attractive buy. The company has adopted a highly franchised business model and collects royalties from its franchisees based on their sales.
So, the owner of Pizza Pizza and Pizza 73 brand restaurants continues to generate stable cash flows despite rising commodity prices and wage inflation, thus allowing it to raise its monthly dividend seven times since April 2020. Currently, its forward dividend yield stands at a healthy 6.16%. Meanwhile, the company continues to expand its footprint and expects to grow its restaurant count by 3-4% this year. Also, its menu innovations and promotional activities could boost its financials in the coming years, allowing it to pay dividends at a healthy rate.
BCE
Another cheap dividend stock you could buy right now is BCE (TSX: BCE), which has underperformed the broader equity markets this year. It has lost around 2% of its stock value as investors worry about rising interest rates impacting its financials. Amid the correction, the company trades at a NTM (next 12 months) price-to-earnings multiple of 17.4 and offers an attractive dividend yield of 6.86%.
Meanwhile, the Canadian telecommunication player could benefit from the rising demand for telecommunication services amid digitization. With most of its infrastructure put in place, the company plans to lower its capital intensity this year. So, it will have more free cash flow at its disposal, thus allowing it to reward its shareholders with healthy dividends.
TC Energy
TC Energy (TSX: TRP) has lost around 5% of its stock value this year due to the losses from an oil spillage at its Keystone pipeline facility and rising interest rates. Meanwhile, the correction offers an excellent entry point for income-seeking investors, given its forward dividend yield of 7.51% and an NTM price-to-earnings multiple of 12.6.
In the first six months, the midstream energy company has put around $2.1 billion of projects into service and is on track to reach $6 billion worth of projects this year. It also looks to strengthen its balance sheet by selling a 40% stake in Columbia Gas Transmission and Columbia Gulf Transmission in a $5.2 billion deal. Besides, it plans to spin off its pipeline segment to enhance shareholders’ value. Considering all these factors, I believe TC Energy would be an excellent buy despite the volatile environment.
NorthWest Healthcare Properties REIT
NorthWest Healthcare Properties REIT (TSX:NWH.UN) would be my final pick, which has lost around 22% of its stock value this year. Weak quarterly performance amid a temporary increase in leverage and higher interest rates have weighed on the company’s stock price. The sell-off has dragged its valuation down to attractive levels, with its price-to-book multiple at 0.8.
Besides, the REIT (real estate investment trust) has adopted several deleveraging initiatives, including selling $340 million worth of non-core assets and lowering its ownership stake in several joint ventures to strengthen its balance sheet. The company’s healthy occupancy rate, long-term lease agreements, and government-backed tenants generate stable cash flows, thus allowing it to pay dividends at an attractive rate. Currently, NEH.UN offers a forward dividend yield of 11.68%, making it an attractive buy.
