In this uncertain market environment, where many stocks are losing value or struggling to maintain their current share price, dividend stocks are some of the best stocks you can own. The consistent income potential they provide, especially dividend stocks that pay cash every month, becomes increasingly attractive when stocks are seeing their share prices fall.
Dividend stocks are always excellent businesses to own because, on top of the capital gains you can earn down the road when you sell the stock, you see returns immediately, which you can reinvest to help compound your capital even quicker.
It’s essential, though, especially in this environment, that you ensure the stocks you’re buying can weather the current economic headwinds and that their dividends are sustainable.
So with that in mind, if you’re looking for a high-quality dividend stock to buy now, Pizza Pizza Royalty (TSX:PZA) currently offers a yield of roughly 6.7% and pays that cash every single month.
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Why is Pizza Pizza such an excellent investment to consider today?
In this environment, almost every dividend stock has significant risk to be aware of, especially stocks that sell discretionary items as opposed to essential goods and services.
So there’s no question that Pizza Pizza, as well as its restaurant competitors, could certainly see an impact on sales as consumers’ budgets are impacted by higher interest rates and a potential recession.
With that being said, though, while many other restaurants and even discretionary businesses in other sectors, such as retail, have seen impacts on their sales as well as profitability, Pizza Pizza has actually continued to see significant growth, even outpacing analyst expectations.
For example, in the third quarter, Pizza Pizza saw same-store sales growth (SSSG) of 7%, which helped push its total sales up 9% after the company saw 11 new net restaurant openings. Furthermore, its earnings per share (EPS) increased to $0.26, up from $0.23 last year.
This impressive growth led to yet another dividend increase for the stock, making that its eighth increase to the dividend since 2020.
The performance of Pizza Pizza has certainly been impressive, both in recovering from the pandemic and in the face of these new economic headwinds, showing why it’s one of the best dividend stocks to buy now.
It’s well-known across Canada as a quick, low-cost and convenient option. Plus, it has its own app and in-house delivery service, which are crucial assets in today’s digitally driven market.
The company’s app is not just a tool for ordering pizza. It’s also designed to enhance the customer experience and help drive sales. With features like personalized notifications, easy-to-use interfaces, and visual order tracking, the app makes ordering pizza a seamless experience for customers.
Plus, the app is crucial to Pizza Pizza’s digital advertising strategy. By collecting valuable customer data, the company can tailor its marketing efforts more effectively, reaching the right audience with the right message at the right time.
This targeted approach helps drive repeat business and attract new customers, ultimately contributing to the dividend stock’s growing sales.
Why is it one of the best dividend stocks to buy now?
Although Pizza Pizza has shown an impressive ability to weather the storm so far, many analysts and economists believe the economic environment will get worse in 2024 before it gets better.
However, even with the expectation of more headwinds in the near term, analysts expect Pizza Pizza to grow both its sales and EPS next year, only at a slower pace.
Therefore, considering that the majority of stocks across the country are seeing significant impacts on their operations, even with a potential slowdown in its growth, Pizza Pizza and its attractive monthly dividend still look like one of the best stocks you can buy now.
So if you’re looking to add a dividend stock to your portfolio and boost your passive income in this environment, Pizza Pizza is certainly one of the top investments to consider today.
