For the most part, the majority of TSX dividend stocks pay their dividends out quarterly to the passive income seekers who invest in their companies. However, there are some stocks that elect to pay investors each month, something that’s attractive for a couple of reasons.
First off, receiving dividend payments more often allows you to begin to reinvest that money quicker, which can help to improve the rate at which your capital compounds over the long haul.
In addition, the stocks that do typically pay out cash to investors each month are often some of the best passive income generators you can buy because the stocks were made for dividend investors.
These stocks are often royalty companies or REITs, which are constantly generating tonnes of cash flow every single month.
It doesn’t necessarily mean they are safer than stocks that pay out quarterly, as that’s relative to how the company is performing and what its payout ratio is. However, it does mean that these are some of the highest-quality stocks to first consider due to the consistent cash flow they are generating.
So with that in mind, if you’re looking for TSX stocks that can earn you passive income every month, here are two of the best to consider today.
A top TSX royalty stock for passive income seekers
Despite the fact that restaurants could see a slowdown in sales if the economy continues to worsen, Pizza Pizza Royalty (TSX: PZA) is showing why it’s one of the top restaurant stocks you can buy on the TSX.
The fact that it is a low-cost option, is quick and convenient, has its own in-house delivery service and app, as well as its national advertising campaigns, Pizza Pizza has a significant competitive advantage over many of its competitors.
So it’s not that surprising that while stocks from many sectors have been struggling in this environment, Pizza Pizza has been posting impressive results in recent quarters. In fact, over the last four quarters, Pizza Pizza’s sales increased by over 12.5%, and its earnings per share increased by over 14%.
Pizza Pizza’s dividend is now nearly 5% higher than it was heading into the pandemic, and its sales over the last four quarters are 7.5% higher than its sales in the four quarters leading up to the pandemic.
So not only has it completely recovered from the pandemic, but it continues to grow its sales, profitability and ultimately its dividend, which currently yields 6.8%, making it one of the top stocks passive income seekers can buy today.
A top energy stock for dividend investors
In addition to Pizza Pizza, another royalty stock that generates tonnes of cash flow and is ideal for passive income seekers is Freehold Royalties (TSX: FRU).
Freehold generates revenue from royalty payments it receives from other energy companies using its lands to produce oil and gas.
This makes it a lower-risk business model because Freehold doesn’t have to spend any money on production or capex to generate revenue. Instead, it just needs to acquire land in high-value areas as cheaply as possible.
This doesn’t mean the stock is without risk altogether. As energy prices fall, not only will it receive less revenue, but other energy companies may also choose to produce less.
Over the longer term, though, it’s an excellent investment, and because Freehold keeps its payout ratio manageable, the dividend looks extremely safe. Freehold constantly retains capital, which it can use to acquire more land in the future. And today, the stock offers a yield of more than 7.3%.
So if you’re looking for top TSX stocks to buy that will pay you monthly and can help boost your passive income, Freehold is one of the best to consider.
